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Item 19 Staff Report Second Dwelling Unit (Continued from August 4, 2023)DATE: TO: MAYOR AND TOWN COUNCIL FROM: ORRY P. KORB, TOWN ATTORNEY6(v SUBJECT: SECOND DWELLING UNIT (Continued from August 4, 2003) a. ADOPT ORDINANCE OF THE TOWN OF LOS GATOS AMENDING THE TOWN CODE DIVISION 7, SECTIONS 29.10.305 THROUGH 29.10.320, SECTION 29.10.320, AND SECTION 29.20.185(8)a REGARDING SECOND DWELLING UNIT b. ADOPT RESOLUTION APPROVING REVISED BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES MEETING DATE: 9/02/03 ITEM NO. COUNCIL AGENDA REPORT August 28, 2003 The ordinance was introduced on June 16, 2003. It was considered for final adoption along with a resolution proposing changes to the Below Market Housing Program on August 4, 2003, at which time Council elected to consider both matters at a later date. The ordinance is Attachment 1 to the StaffReport dated July 31, 2003 and the resolution is Attachment 1 to the Council Report dated July 24, 2003. Attachment 1 to this report are letters opposing the affordable housing requirement. Attachments: 1. Multiple letters dated July 30, 2003 and August 4, 2003. PREPARED BY: ORRY P. KORB, TOWN ATTORNEY OPKLMB/wp [NAATYt2ND-DwcIISept02.TCR.wpdi Reviewed by: �%' Town Manager Q5 s Assistant Town Manager Clerk Finance Community Development Rev: 8/28/03 1:50 pm Reformatted: 7/19/99 File# 301-05 July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 VIA FACSIMILE: 408-354-8431 RE: Second Reading on Second Unit Rent Control Ordinance Dear Mayor Decker and Councilmembers: RECEIVED AUG 0 5 2003 MAYOR & TOWN COUNCIL As a homeowner in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerely ATTACHMENT ,3. nuu—u:r ua iu:aa rKUM— July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE; 408-354-8431 T-875 P.O1/O1 F-060 Dear Mayor Decker and Councilrnembers: As a REALTORS in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. lithe rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may nor be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerely Beverly Purkey 17302 Eaton Lane, Monte Sereno 95030 (address) Aug-04-03 O3.,i- Judi 408-354-5856 P.02 July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 VIA FACSIMILE: 408-354-8431 RE: Second Reading on Second Unit Rent Control Ordinance Dear Mayor Decker and Councilmembers: As a homeowner in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerely (address) )‘ a. 408-354-5856 P.01 July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and Councilmembers: As a REALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerel (address) / FROM : FREL t3ARDEN FAX NO. : 14083588E90 Aug. 04 2003 34:56PM al July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 9.5031 VIA FACSIMILE: 408-354-8431 RE: Second Reading on Second Unit Rent Control Ordinance Dear Mayor Decker and Counci lmembers: As a homeowner in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes dced restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. 1 believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners_ If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further. the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. SI,tfccrely r7 (1 1c1 (address) zzS 6Gj0s G4 9.5o,3c,z uw, rr.vr GR, iL) r i-Kac July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 1 10 East Main Street Los Gatos. CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and Councilmembers: As a REALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29,10.320, which establishes deed restrictions and rent control on new secondary units. be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then. while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance. namely the production of secondary units. Further, the Costa -Hawkins Rental blousing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times. the Town Council should not waste the Town's time andmoney on an ordinance that may not be legal to begin with. For these reasons, l respectfully request that the rent control provisions of the proposed secondary unit ordinance he removed. Sincerely N&&r c,two ck & (address) (..0S te_l1,� AUG-04-03 17:07 FROlM- T-854 P 02/02 F-039 July 30, 2003 Mayor Sandy Decker and the Las Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and Councilmembers: As a R.EALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. 1 believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerely AUG-04-03 17:07 FROM- T-854 P 01/02 F-039 July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and Councilmembers: As a REALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should no; waste the Town's time and money on an ordinance that may not be legal to begin with_ For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. ot7-(/ (address) $ ��� AUG-04-2003 04:53PM FROM-ALAIN PINEL REALTY 1-408-399-6387 T-? 1 P 001/6u; July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and CounciImembers: As a REALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new second units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the legal to begin with. Town Council should not waste the Town's time and money on an ordinance that may not be For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. 'ncerely acqu yn Hopkins 40. 358-1111 ex 802 Alain Pinel Realtors, Los Gatos North v ... '-r.J-OUY0 p. 1 July 30, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 RE: Second Reading on Second Unit Rent Control Ordinance VIA FACSIMILE: 408-354-8431 Dear Mayor Decker and Councilmembers: As a REALTOR® in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. I believe this provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. If the rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost. Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance. The Town may be subjecting itself to a Iong, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the '. Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sinc - rely (address) i� >/L/c� AUG-04-03 16:59 FROM- T-850 P 01/Ui r-uj4 8/4/03 Mayor Sandy Decker & Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 VIA FACSIMILE: 408-354-8431 RE: Second Reading on Second Unit Rent Control Ordinance Dear Mayor Decker and Councilmembers: As a homeowner in Los Gatos, I am writing to ask that the Town Council remove Section 29.10.320, which establishes deed restrictions and rent control on new secondary units, be stricken from the proposed secondary unit ordinance. This provision is counterproductive to the goal of providing more secondary units. The rent control provision unfairly burdens individual homeowners. lithe rent control provision is adopted, 100 percent of new secondary units would be required to rent at BMP rates. Interestingly then, while other developments can offset the cost of providing BMP housing by charging a higher market rate, the entire burden of providing BMP secondary units would be assumed by an individual homeowner with no mechanism to offset the cost_ Putting restrictions and burdensome reporting requirements on owners of such units is a disincentive to build or seek amnesty for second units. Requiring owners to rent to tenants at only a below market rate is a disincentive to build and rent second units. This goes against the stated purpose of the proposed ordinance, namely the production of secondary units. Further, the Costa -Hawkins Rental Housing Act preempts the Town from adopting the rent control provision of the ordinance, The Town may be subjecting itself to a long, costly legal battle to defend a questionable ordinance. With tight budgets and tough economic times, the Town Council should not waste the Town's time and money on an ordinance that may not be legal to begin with. For these reasons, I respectfully request that the rent control provisions of the proposed secondary unit ordinance be removed. Sincerely, cU, «014, f Randall Kemp Randall Kemp 55 Church St., Ste. 1303 Los Gatos, CA 95030 Beverley B. Bryant, Ph.D. 16940 Placer Oaks Road Los Gatos, CA 95032 408-356-0809 September 2, 2003 Mayor and Members of the Town Council Town of Los Gatos 110 East Main Street Los Gatos, CA 95030 clerk@town.los-gatos.ca.us RE: Council Consideration of 2nd Dwelling Units Ordinance and Revision of Below Market Price Housing Program Guidelines Dear Los Gatos Town Council, It is my understanding that you will vote to impose rent control on second units at tonight's Town Council meeting. Because of a prior commitment, I am unable to attend. However, I want to have my views recorded for the meeting deliberations and minutes. I have been a Los Gatos since 1991, a property owner since 1994. I respect the way the town does business, and believe that I am fortunate to live in well -managed community, which encourages its citizens to participate fully in the governmental process. It is my understanding that the Council is interested in increasing the amount of affordable housing in Los Gatos. Although your goals might be good, I am very concerned that the result of your vote tonight will be to remove the rights of the individual property owner to respond to market conditions. Your actions will set a policy of rent control, which discourages the property owner from making investments in his/her property, and is a disincentive to providing additional housing in Los Gatos, exactly the situation that you probably want to create. Please review your goals and find other means to attain your objectives rather than imposing restrictive conditions on Los Gatos property owners. Many of the people who might rent second units do so in order to afford to live in the town and pay their own property taxes. Rent restrictions on second units will be a disincentive for Los Gatos homeowners to improve their property, or to rent in the first place. As I citizen of Los Gatos, I do not want my Town Council to restrict my rights, and do not want to limit those of my fellow citizens. Please consider these issues carefully before voting this evening. Sincerely yours, 5. Beverley B. Bryant, Ph.D. August 28, 2003 Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 Dear Los Gatos Town Council: e I am writing you as a homeowner and resident of Los Gatos. I also happen to own rental property. I have been alerted to your proposal to adopt rent control on homeowners with second units on their property. I have been told that you plan to adopt this rent control on Tuesday, September 2, 2003. Unfortunately, I am unable to attend this meeting. However, if I were there, I would urge you to oppose rent control on homeowners with second units. This is a terrible idea. As someone who invests in real estate and owns rental property, I can tell you that rent control is a disincentive to investing in a property. Why would anyone want to buy a property if they are forced to rent it at a price set by the government? Why would anyone want to build a second unit if the Town is going to tell them what they can rent it for? According to the newspapers, the reason you are adopting this is to create affordable housing. How can you create affordable housing if no one wants to build it because of the restrictions on rent? I just don't believe this is a well though out idea. I was also told that the Town will probably be sued if this is adopted. I have also been told that you have reduced your legal budget because of the economic climate. How can you subject the Town to a lawsuit that we can't afford to defend? As a homeowner, I don't want my services cut so the Town can defend an ordinance that I, and many homeowners, object to. Please, do not waste our valuable resources on a lawsuit that is completely unnecessary! Again, please don't adopt rent control on homeowners with second units. It's a bad idea and could end up costing us much more that its worth. If you have questions, please contact me. Sincere! , Azita Alaverdi 19341 overlook Road Los Gatos, Ca 9503 ((408) 399-9779 11 2 2093 August 28, 2003 TOWN OF LOS GATOS OFFICE OF TOWN CLERK Town of Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 Dear Council Members: My wife and I have lived in Los Gatos for many years. We enjoy this community greatly. That is why we are writing to express our strong opposition to rent control on second units. We urge you to reject this proposal. Rent control is a disincentive to investing and maintaining one's property. Our neighborhoods in Los Gatos are wonderful. If you require owners to rent their units at rent controlled rates, you take away their incentive to invest in their properties. Over time, these units will become dilapidated and neglected. This is not good for Los Gatos neighborhoods. Many second units are built for purposes other than rental. However, it is safe to say that they can become rentals at some point in time. If a property owner is limited in their ability to make a reasonable profit, thy may decide not to rent the unit at all. This is not good, especially in Los Gatos where housing is desperately needed. You say you want affordable housing, but by doing this, you discourage it from being built or maintained. Again, please don't adopt this rent control ordinance. It is bad for Los Gatos neighborhoods. I hope you will take our thoughts into serious consideration before you take action on this ordinance. Fondly, ohn and Robin Je1kins 115 Sierra Linda Los Gatos, CA 95032 408-379-2430 159 Escobar Ave. Los Gatos, CA 95032 August 28, 2003 Los Gatos Town Council 110 E. Main Street Los Gatos, CA 95030 Dear Council Members: Regarding Secondary Unit Ordinance I am a homeowner in the lovely Town of Los Gatos. This letter is to request that you amend out the rent control provision of this ordinance. I do not believe that rent control will lead to more affordable housing. It is simply one more intrusion on our private property rights. I would come down to the meeting September 2, 2003 and address you personally, but must see my 94 year old mother in Seattle. Sincerely yours, Helen Cockrum AUG-29-2003 10:35AM FROM-ALAIr 'DEL REALTY 1-408-399-6387 T-861 P.001/001 F-265 Los Gates Town Council 110 E. Main St. Los Gates, CA 95030 Dear Council Members Regarding Secondary Unit Ordinance Asa hor ieowner in the Town of Los Gatos, 1 request that you amend out the rent control portion of this ordinance. I do not believe that rent control wilt lead to more affordable housing. It is simply one more intrusion on our private pi operty rights. Sincerely your, Jackie Hopkins 107 Olivu st. Los Gates, Ca. 95030 8/29/2003 Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509486716 T-283 P.002/006 F-467 SiliconValley Association of REALTORS ID August 29, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 VIA FACSIMILE: 408-354-8431 Re: Second Reading of Second Unit Rent Control Ordinance On behalf of the Silicon Valley Association of REALTORS® (SILVAR), I would like to again request that Section 29.10.320, part A and B of the secondary unit ordinance be removed. We have no objection to the remainder of the ordinance. SILVAR remains steadfast in our opinion that the proposed rent control provisions of the ordinance are not permitted under the State Costa Hawkins Rental Housing Act. As you know, Costa -Hawkins prohibits rent control on new construction and single-family properties. Please refer to the letter from our Association General Counsel, D. Kent Westerberg dated August 4, 2003 which highlights the legal challenges the Town may be subjected to if the ordinance as presented is adopted. A copy of this letter is attached. While we applaud the Town's efforts to promote affordable housing in Los Gatos, we believe that this proposal will serve as a disincentive to the development of such housing. The County of Santa Cruz has a similar ordinance that has been in effect since 1986. At that time, the County of Santa Cruz placed income and rental restrictions on all second units. From 1986 to 1994, only 9 second units were built. In 1994, the County amended its ordinance to allow homeowners to construct second units for family members to reside. For those units, no rent restrictions were required. Since 1994, when the ordinance was amended, an additional 146 units were built. According to Mark Demming, a Santa Cruz County Planner, the overwhelming majority of the second units built since 1994 have been for family members with no rental restrictions. It appears from this example, rent restrictions on second units serves as a disincentive to their development. 345 S. San Antonio Road Los Altos, CA 94022 Telephone: 650.949.911 s facsimile: 650.948.6716 www.siliconvalley-realror..org Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509486716 T-283 P.003/006 F-467 Again, SILVAR respectfully requests that Section 29.10.320 part A and B of the secondary unit ordinance be removed. We applaud the Town for its effort to promote affordable secondary units and look forward to working with the Town Council, staff, and other key community stakeholders to find alternatives to rent control to achieve this laudable goal. Sincerely, Natalie Cardenas Government Affairs Director Attachment Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509486716 7-283 P.004/006 F-467 ATWOOD, HAIMAN & WESTERBERG ATTORNEYS AT LAW 18805 COX AVENUE, MATE 200 SARATOGA, CALIFORNIA 95070 TELEPHONE (408) 370-5070 FACSIMILE (408) 370-5725 WW W.ATWOODLA W. COM August 4, 2003 By Hand Delivery and Facsimile (408) 354-8431 Hon. Orry Korb, Town Attorney Hon. Sandy Decker, Mayor Hon. Steve Glickman, Vice Mayor Hon. Diane McNutt, Council Member Hon. Joe Pizynski, Council Member Hon. Mike Wasserman, Council Member TOWN OF LOS GATOS 110 E. Main Street Los Gatos, CA 95031 Re: Proposed Section 29.20.320 of Town Code Division 7 (Deed Restriction/Rent Control Proposal for New Second Dwelling Units) Gentlepersons: I am the attorney for the Board of Directors of the Silicon Valley Association of Realtors (SILVAR). I am writing with regard to the above -referenced proposed Town Code amendment, which states the following: Deed Restriction. A deed restriction shall be recorded for all new second dwelling units indicating that if the unit is for rental purposes, it shall comply with the affordability rent level for Santa Clara County for very low income as established by the Federal Department of Urban Development. Under the proposed scheme, a property owner seeking permission to build a second unit would have to agree to a deed restriction placing the second unit under rent control, with rent levels subject to control at the time of the initial tenancy. In a Council Agenda Report dated July 24, 2003, entitled "Resolution Adopting Revised Below Market Price Housing Program Guidelines," the Town Manager proposed adoption of revised guidelines for implementing the proposed amended ordinance. Specifically, the Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509486716 T-283 P.005/006 F-467 guidelines would: 1. Allow the property owner to determine who they will rent the unit to so long as the rent is restricted to 20% below Fair Market Rents as determined by the Santa Clara County Housing Authority. In this instance, no income eligibility requirement will be imposed. 2. If the property owner wishes to use the BMP program to obtain assistance in finding a renter, then the unit must be rented in compliance with the BMP guidelines in terms of income eligibility and be restricted to 20% below Fair Market Rents as determined by the Santa Clara Housing Authority. The July 24th Agenda Report also includes a reference table which sets forth the current rent levels for units restricted to 20% below Fair Market Rents as determined by the Santa Clara County Housing Authority. As an example, the owner of a one bedroom apartment would be allowed to charge a monthly rent of $1,140, regardless of the quality or condition of the apartment or the neighborhood in which it was located. The proposed mandate, which amounts to rent control, would be subject to challenge on several grounds, including, but not limited to, the following. First, it would violate California's Costa -Hawkins Rental Housing Act, which exempts newly constructed units from rent control (Civ. Code § 1954.52(a)(1)) and permits owners to establish the initial rental rate for any residential unit, unless certain delineated exceptions specifically set out in the statute were met. Civ. Code § 1954.53(a). I understand you have taken the position that the Costa -Hawkins Act pertains to ordinances that focus only on rent control issues, and as the proposed amended ordinance addresses other topics as well, the Act does not apply. Please provide the legal authority that supports this argument, if any. My understanding is that if the ordinance has an impact that results in rent control, the Act cannot be circumvented based on how the ordinance is characterized. Courts look to the logic and effect of a legal enactment, not the title assigned it by authors, in order to determine its essential character. See Thomas v. City of East Palo Alto, 53 Ca1.App.4th 1084, 1087 (1997). Second, the rent control permit condition does not respond to any public needs created by the construction of new second units. The proposed amendment would result in an unlawful taking of private property, and would be vulnerable under the constitutional rule that says any exactions imposed as a condition for permission to make use of land must be necessary to "fulfill public needs emanating from the landowners' proposed use." See Liberty v. California Coastal Com., 113 Ca1.App.3d 491, 503 (1980); see also Nollan v. California Coastal Commission, 483 U.S. 825, 837 (1987). Under Fifth Amendment case law, an unconstitutional taking occurs when goverrunent attaches Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509486716 T-283 P.006/006 F-467 Hon. Orry Korb, et al. August 4, 2003 Page 3 a condition to its grant of a land -use request, and there is not an "essential nexus" between the "condition" and the "justification" for the condition. Nollan, supra, 483 U.S. 825 (1987). In other words, the permit condition must respond to some need or impact created by the propose land -use project. The proposed rent -control mandate for second units in Los Gatos is unconnected to any need or impact created by the construction of a second unit. Rather, the mandate simply forces targeted landowners to bear the brunt or providing a general public need. Third, the rent -control permit does not advance a legitimate state purpose. A key fifth amendment rule declares that private property is unconstitutionally taken if a land - use regulation fails to "substantially advance legitimate state interests." Agins v. City of Tiburon, 447 U.S. 255, 260 (1980). The rent controls on second units in Los Gatos would be likely to inhibit the construction of new second units. Moreover, the proposed guidelines may even result in a disincentive to keep the units maintained, as a unit owner will receive the same rent for a given type of unit (based on number of bedrooms) regardless of the quality of the unit, building, neighborhood, or upkeep. Finally, because under the proposed guidelines the unit owner is free to rent the unit to anyone he or she pleases, as long as he or she charges 80% of Fair Market Rent, the stated purpose of the amendment - to provide housing for persons with limited income - may nor even be realized. Nothing in the proposed amendment would stop a unit owner from renting the unit to a wealthy person, as long as the rent is below Fair Market Rent. The foregoing disincentives and loophole hardly constitute a legitimate state purpose. I urge you to reconsider the propriety of the proposed amendments. If the amendments are passed, they will certainly be challenged with a petition for writ of mandate in the Superior Court, contending that they are preempted by stare law and are unconstitutional. Very truly yours, D. KENT WESTERBERG DKW:ddc Encl. MEETING DATE: 9/02/03 ITEM NO. # 19 COUNCIL AGENDA REPORT Desk Item DATE: September 2, 2003 TO: MAYOR AND TOWN COUNCIL FROM: ORRY P. KORB, TOWN ATTORNEY(/ SUBJECT: SECOND DWELLING UNIT (Continued from August 4, 2003) A. ADOPT ORDINANCE OF THE TOWN OF LOS GATOS AMENDING THE TOWN CODE DIVISION 7, SECTIONS 29.10.305 THROUGH 29.10.320, SECTION 29.10.320, AND SECTION 29.20.185(8)a REGARDING SECOND DWELLING UNIT B. ADOPT RESOLUTION APPROVING REVISED BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES Attachment 1 to this report are letters opposing the affordable housing requirement received after the preparation of the Council Agenda Report. Attachments: 1. Letters dated August 28, 2003 through September 2, 2003 PREPARED BY: ORRY P. KORB, TOWN ATTORNEY OPKLMB/wp [N: ATYI2ND-Dwell.Sept02.Desk-TCR.wpd] Reviewed by: own Manager Qs JS Assistant Town Manager Clerk ti Finance Community Development Rev: 9/2/03 2:28 pm Reformatted: 7/19/99 File# 301-05 159 Escobar Ave. Los Gatos, CA 95032 August 28, 2003 Los Gatos Town Council 110 E. Main Street Los Gatos, CA 95030 Dear Council Members: Regarding Secondary Unit Ordinance I am a homeowner in the lovely Town of Los Gatos. This letter is to request that you amend out the rent control provision of this ordinance. I do not believe that rent control will lead to more affordable housing. It is simply one more intrusion on our private property rights. I would come down to the meeting September 2, 2003 and address you personally, but must see my 94 year old mother in Seattle. Sincerely yours, Helen Cockrum Aur -CV-41 4S I Z :41 pm From -SILICON VALLEY ASSN SiliconValley Association of REALTORS August 29, 2003 Mayor Sandy Decker and the Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 VIA FACSIMILE: 408-354-8431 +6508486716 Re: Second Reading of Second Unit Rent Control Ordinance T-283 P.002/006 F-467 On behalf of the Silicon Valley Association ofREALTORS® (SILVAR), I would like to again request that Section 29.10.320, part A and B of the secondary unit ordinance be removed. We have no objection to the remainder of the ordinance. SILVAR remains steadfast in our opinion that the proposed rent control provisions of the ordinance are not permitted under the State Costa Hawkins Rental Housing Act. As you know, Costa -Hawkins prohibits rent control on new construction and single-family properties. Please refer to the letter from our Association General Counsel, D. Kent Westerberg dated August 4, 2003 which highlights the legal challenges the Town may be subjected to if the ordinance as presented is adopted. A copy of this letter is attached. While we applaud the Town's efforts to promote affordable housing in Los Gatos, we believe that this proposal will serve as a disincentive to the development of such housing. The County of Santa Cruz has a similar ordinance that has been in effect since 1986. At that time, the County of Santa Cruz placed income and rental restrictions on all second units. From 1986 to 1994, only 9 second units were built. In 1994, the County amended its ordinance to allow homeowners to construct second units for family members to reside. For those units, no rent restrictions were required. Since 1994, when the ordinance was amended, an additional 146 units were built. According to Mark Demming, a Santa Cruz County Planner, the overwhelming majority of the second units built since 1994 have been for family members with no rental restrictions. It appears from this example, rent restrictions on second units serves as a disincentive to their development. 345 S. San Antonio Road Los Altos, CA 94022 Telephone: 650,949.9115 Facsimile: 650.948.6716 www.sil iconva lieyrealror.;.org Aug-29-2003 12:41pm From -SILICON VALLEY ASSN +6509488718 T-283 P.0O3/0O8 F-467 Again, SILVAR respectfully requests that Section 29.10.320 part A and B of the secondary unit ordinance be removed. We applaud the Town for its effort to promote affordable secondary units and look forward to working with the Town Council, staff, and other key community stakeholders to find alternatives to rem control to achieve this laudable goal. Sincerely, Natalie Cardenas Government Affairs Director Attachment 0 AUG-29-2003 10:35AIt FROM-ALAIN PINEL REALTY 1-408-399-6387 T-861 P.001/001 F-265 174 Los Gatos Town Council 110 E. Main St. Los Gatos, CA 95030 Dear Council Members Regarding Secondary Unit Ordinance As a hon ieowner in the Town of Los Gatos, 1 request that you amend out the rent control portion of this ordinance. I do not i,elieve that rent control will lead to more affordable housing. it is simply one more intrusion on our private property rights. Sincerely your, Jackie Hopkins 107 Olivu st. Los Gatos, Ca. 95030 8/29/2003 Beverley B. Bryant, Ph.D. 16940 Placer Oaks Road Los Gatos, CA 95032 408-356-0809 September 2, 2003 Mayor and Members of the Town Council Town of Los Gatos 110 East Main Street Los Gatos, CA 95030 clerk©town.Ios-gatos.ca. us RE: Council Consideration of 2"d Dwelling Units Ordinance and Revision of Below Market Price Housing Program Guidelines Dear Los Gatos Town Council, It is my understanding that you will vote to impose rent control on second units at tonight's Town Council meeting. Because of a prior commitment, I am unable to attend. However, I want to have my views recorded for the meeting deliberations and minutes. I have been a Los Gatos since 1991, a property owner since 1994. I respect the way the town does business, and believe that I am fortunate to live in well -managed community, which encourages its citizens to participate fully in the governmental process. It is my understanding that the Council is interested in increasing the amount of affordable housing in Los Gatos. Although your goals might be good, I am very concerned that the result of your vote tonight will be to remove the rights of the individual property owner to respond to market conditions. Your actions will set a policy of rent control, which discourages the property owner from making investments in his/her property, and is a disincentive to providing additional housing in Los Gatos, exactly the situation that you probably want to create. Please review your goals and find other means to attain your objectives rather than imposing restrictive conditions on Los Gatos property owners. Many of the people who might rent second units do so in order to afford to live in the town and pay their own property taxes. Rent restrictions on second units will be a disincentive for Los Gatos homeowners to improve their property, or to rent in the first place. As I citizen of Los Gatos, I do not want my Town Council to restrict my rights, and do not want to limit those of my fellow citizens. Please consider these issues carefully before voting this evening. Sincerely yours, 6. A-,___ Beverley B. Bryant, Ph.D. ij August 28, 2003 Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 Dear Los Gatos Town Council: I�h TOWN OF LOS GATOS OFFICE OF TOWN CLERK I am writing you as a homeowner and resident of Los Gatos. I also happen to own rental property. I have been alerted to your proposal to adopt rent control on homeowners with second units on their property. I have been told that you plan to adopt this rent control on Tuesday, September 2, 2003. Unfortunately, I am unable to attend this meeting. However, if I were there, would urge you to oppose rent control on homeowners with second units. This is a terrible idea. As someone who invests in real estate and owns rental property, I can tell you that rent control is a disincentive to investing in a property. Why would anyone want to buy a property if they are forced to rent it at a price set by the government? Why would anyone want to build a second unit if the Town is going to tell them what they can rent it for? According to the newspapers, the reason you are adopting this is to create affordable housing. How can you create affordable housing if no one wants to build it because of the restrictions on rent? I just don't believe this is a well though out idea. I was also told that the Town will probably be sued if this is adopted. I have also been told that you have reduced your legal budget because of the economic climate. How can you subject the Town to a lawsuit that we can't afford to defend? As a homeowner, I don't want my services cut so the Town can defend an ordinance that I, and many homeowners, object to. Please, do not waste our valuable resources on a lawsuit that is completely unnecessary! Again, please don't adopt rent control on homeowners with second units. It's a bad idea and could end up costing us much more that its worth. If you have questions, please contact me. Sincere! , Azita Alaverdi 19341 overlook Road Los Gatos, Ca 9503 ((408) 399-9779 August 28, 2003 Town of Los Gatos Town Council 110 East Main Street Los Gatos, CA 95031 Dear Council Members: 2 2003 TOWN OF LOS GATOS OFFICE OF TOWN CLERK My wife and I have lived in Los Gatos for many years. We enjoy this community greatly. That is why we are writing to express our strong opposition to rent control on second units. We urge you to reject this proposal. Rent control is a disincentive to investing and maintaining one's property. Our neighborhoods in Los Gatos are wonderful. If you require owners to rent their units at rent controlled rates, you take away their incentive to invest in their properties. Over time, these units will become dilapidated and neglected. This is not good for Los Gatos neighborhoods. Many second units are built for purposes other than rental. However, it is safe to say that they can become rentals at some point in time. If a property owner is limited in their ability to make a reasonable profit, thy may decide not to rent the unit at all. This is not good, especially in Los Gatos where housing is desperately needed. You say you want affordable housing, but by doing this, you discourage it from being built or maintained. Again, please don't adopt this rent control ordinance. It is bad for Los Gatos neighborhoods. I hope you will take our thoughts into serious consideration before you take action on this ordinance. Fondly, ohn and Robin Je'r kips 115 Sierra Linda Los Gatos, CA 95032 408-379-2430 Town Council Minutes September 2, 2003 Redevelopment Agency Los Gatos, California OTHER BUSINESS CONTINUED ADVANCED PLANNING WORK PROGRAM/FISCAL YEARS 2003-2004 AND 2004-2005 Council Comments: Council suggested that certain of the issues discussed under Commercial Design Guidelines be included in the Residential Guidelines study also, specifically architectural compatibility when integrating some of the new solar technologies. There was also discussion about coordinating procedures so that applicants can have all of the information and procedures explained at one time. That a customer might be able to receive a package of materials which could also be coordinated with Public Works and explain as many procedures as possible throughout the various departments the applicant may need to access. Motion by Mr. Glickman, seconded by Ms McNutt, that Council approve the proposed advanced planning project priorities as set forth in the Advanced Planning Work Program for Fiscal Year 2003- 2004 and Fiscal Year 2004-2005. Carried unanimously. SECOND DWELLING UNIT ORDINANCE/PUBLIC HEARING (19A & B.38) Mayor Decker stated that this was the time and place duly noted to consider: A) adopting ordinance amending the Town Code Division 7, Sections 29.10.305 through 29.10.320, Section 29.10.320 and Section 29.20.185(8)a, regarding Second Dwelling Units (Introduced on 6/16/03); and B) adopting resolution adopting revised Below Market Price Housing Program Guidelines. Bud Lortz, Director of Community Development, spoke of the research done on the issues related to the mandatory affordability provision contained in the proposed second unit ordinance. He noted an alternative approach would be to provide financial incentives for income and rent restricted second units. This could be accomplished through the Town's below market price program by creating an additional program for second units that is voluntary on the part of the property owner. The BMP funds and the Redevelopment 20% set -a -side can then be used to provide low or no interest loans for producing affordable housing through this second unit program The following people from the audience addressed this item: Natalie Cardenas, representing Silicon Valley & Santa Clara County Association of Realtors and the Non Profit Trade Association for the realtor community in Los Gatos, appreciated what the Director of Community Development had to say about the proposed changes to' the ordinance and the work that will be done with the BMP policies. She liked the way staff had worked outside the box and presented its proposals. She will be interested in seeing the final ordinance and resolution. Don Callahan thanked Council for the work it was doing and asked for another month to study and work on the issue. Phil Rhodes, applauded the direction that Council was going and noted that only the new units would be affected. John Jenkins asked if the restrictions that would be placed on the new secondary unit would run with the property when sold. He was informed by staff that that issue would be addressed in the next report. Linda Asbury supported the direction that Council had taken on this community issue. No one else from the audience addressed this item. Motion by Mr. Wasserman, seconded by Mr. Glickman, to amend the proposed ordinance and direct staff to bring back an ordinance with modifications eliminating the affordability clause, and adding an incentive program brought forward by staff on September 15, 2003 and that the amended BMP resolution return to Council on October 6, 2003. Carried unanimously. N:\CLK\Council Minwes120031M 09-02-03.wpd 7