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Staff Report PREPARED BY: ROBERT SCHULTZ Town Attorney Reviewed by: Town Manager and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 03/21/2107 ITEM NO: 11 DATE: MARCH 15, 2017 TO: MAYOR AND TOWN COUNCIL FROM: ROBERT SCHULTZ, TOWN ATTORNEY SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. RECOMMENDATION: Staff recommends that the Town Council: a) deny the request for a refund of fines for 130 Massol Avenue and b) deny the request for a waiver of fines for 205 University Avenue. BACKGROUND: On May 15, 1989, Town Council adopted Ordinance 1789 to define demolition of historic structures in an attempt to distinguish between a remodel and a new house. This was necessary because many developers were buying older houses for remodelin g purposes. However, when the "remodel" was complete, there was little of the existing house preserved. This issue became more important when a historic structure was involved. As a result, a definition of demolition of historic structures was added to the Town Zoning Code. On May 7, 2001, due to the number of unlawful demolitions which had been occurring, the Town Council adopted Ordinance 2083 to add definitions, penalties and an appeal process for unlawful demolition of historic structures. The definition of “Demolition (Historical Structure)” is set forth in 29.10.020 and states in pertinent part: PAGE 2 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL BACKGROUND (Cont’d): Demolition (historic structures) means: 1) Removal of more than twenty-five (25) percent of the wall(s) facing a public street(s) (or a street facing elevation if the parcel is a corridor lot or is landlocked) or fifty (50) percent of all exterior walls; or 2) Enclosure or alteration (i.e.: new window and or window relocation) of more than twenty-five (25) percent of the walls facing a public street (or a street facing elevation if the parcel is a corridor lot or is landlocked) or fifty (50) percent of the exterior walls so that they no longer function as exterior walls; or All remaining exterior walls must be contiguous and must retain the existing exterior wall covering. No new exterior wall covering shall be permitted over the existing exterior wall covering. The following are exempt from this definition: a. Replacement. The exterior wall covering may be removed if the covering is not original to the structure. b. Repair. The removal and replacement of in kind , non-repairable exterior wall co vering resulting in no change to its exterior appearance or historic character if approved by the deciding body. c. Removal. The removal of an addition(s) that is not part of the original structure and which has no historic significance, as determined by the Historic Preservation Committee. Demolition shall be determined by subsections (1) and (2) above for the original structure, where walls enclosed by additions shall be considered as exterior walls. The Town Code related to appeals and penalties is set fo rth in 29.20.265(b) and 29.10.09030(g) and states in pertinent part: 29.20.265(b) For hearings dealing with an appeal of an unlawful demolition and/or the penalty fee for the lawful demolition , the Planning Commission shall do the following: PAGE 3 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL BACKGROUND (Cont’d): 1) The Planning Commission shall consider any written or oral evidence consistent with its rules and procedures regarding the violation, compliance by the violator or by the real property owner, and the amount of the penalty. 2) The Planning Commission shall make the findings and issue its determination regarding: a. The existence of the violation; b. The appropriateness of the amount of the penalty fee. 3) The Planning Commission shall issue written findings of each violation. The findings shall be supported by evidence received at the hearing. 4) If the Planning Commission finds by the evidence provided that a violation has occurred, the Planning Commission shall affirm the decision of the Planning Director. 5) If the Planning Commission finds that no violation has occurred, the Planning Commission shall state a finding of those facts. 6) The Planning Commission may approve or reduce the amount of the penalty but not the application penalty fee which is established by resolution. 29.10.09030(g) Penalties for unlawful demolition: A property owner who has unlawfully demolished a structure shall: 1) File the required Planning and Building Depa rtment applications and pay the required fees as established by resolution for new applications and for work unlawfully completed. 2) Be subject to the greater of the following penalti es set by the Planning Director as an administration order: a. If the structure has a Landmark Historic Preservation designation a fine equaling fifteen (15) percent of the building permit valuation at the time of demolition , as determined by the Planning Director; or b. If the structure was an historic residence and does not have a Landmark Historic Preservation overlay zone, the fine shall be equal to ten (10) percent of the building permit valuation at the time o f demolition, as determined by the Planning Director. PAGE 4 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL BACKGROUND (Cont’d): If no building permit was issued, the fine shall be assessed on the building permit filed for the replacement structure. In 2010, the owner of 130 Massol Avenue was fined for demolition of a historical structure without a permit pursuant to the Town Code, paid the fine of $82,950, and is now requesting a refund of the fine (Attachment 1). In 2014, the owner of 205 University Avenue was fined for demolition of a historical structure without a permit pursuant to the Town Code, has not paid the fine of $23,200.00, and is requesting a waiver of the fine (Attachment 2). DISCUSSION: A. 130 Massol Avenue In May 2009, the Town approved the relocation and addition for a contributing historic structure at 130 Massol Avenue. During the building permit process, the Town required a demolition affidavit which requires all parties of the project to review the Town’s demolition code requirements. On July 2, 2010, the Town was made aware of work beyond the approved plans and the Town placed a stop work on the project. The work resulted in demolition of the contributing historic structure. Pursuant to Town Code, the Town required an Architecture and Site application and payment of fines prior to continuing construction. In order to spread the fine over time , as opposed to a lump sum payment, the Town agreed to a payment schedule for the fines and the property owner has paid the total sum of $82,950 for the demolition of a historical structure (Attachment 3). The remodel to the historical structure has since been completed and no further approvals are required by the Town. In July 2013, the owner requested that the Town refund the fines. Subsequently, the Town staff communicated and met with the property owner on several occasions and explained that only the Council had the ability to refund fines. The property owner’s position was that he was not aware of, and claims that Staff did not tell him, that he could appeal the fines pursuant to Town Code. In March 2015, this matter came before the Town Council. Council Member Rennie recused himself due to the fact that he owns real property within 500 feet. Council Member Sayoc was PAGE 5 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL DISCUSSION (Cont’d): absent. A motion by Council Member Steve Leonardis to grant the request for refund of the fines failed for lack of a second. A motion by Mayor Marcia Jensen to deny the request for refund of the fines was seconded by Vice Mayor Barbara Spector failed 2/1, Council Member Steve Leonardis voting no. The item was continued to a future Council meeting when additional Council Members would be in attendance and the Town Attorney would do further research on the conflict of interest with regards to Council Member Rob Rennie. B. 205 University Avenue In April 2014, the Town approved the addition and remodel for a contributing historic structure at 205 University Avenue. During the building permit process, the Town required a demolition affidavit which requires all parties of the project t o review the Town’s demolition code requirements. On July 3, 2014, the Town was made aware of work beyond the approved plans and the Town placed a stop work on the project. The work resulted in demolition of the contributing historic structure. Pursuant to Town Code, the Town required additional plans to be submitted. The addition and remodel to the historical structure has since been completed and no further approvals are required by the Town. Pursuant to Town Code, the Town Manager requires the payment of fines in the amount of $23,200.00 for the demolition of a historic structure before final occupancy will be granted to the property owner. In November 2015, the owner requested that the Town waive the fines. Subsequently, the Town staff communicated and met with the property owner on several occasions and explained that only the Council had the ability to waive fines. The property owner’s position was that she was not aware of, and Town Staff did not tell her, that she could appeal the fines pursuant to Town Code. C. Conflict of Interest Council Member Rob Rennie owns residential real property within 500 feet of 130 Massol Avenue. Council Member Barbara Spector and Marico Sayoc both own residential real property within 500 feet of 205 University Avenue. Section 87100 of the Political Reform Act prohibits a public official from making, participating in, or otherwise using his or her office position to influence a governmental decision in PAGE 6 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL DISCUSSION (Cont’d): which the official has a financial interest. For real property financial interests within 500 feet of the project, there is a prohibition on participation in a governmental decision unless the Fair Political Practices Commission (FPCC) provides “written advice allowing an official to participate under . . . circumstances [where] the Commission determines that there are sufficient facts to indicate that there will be no reasonably foreseeable measurable impact on the official’s property.” In January 2017, the Town Attorney’s Office sent a legal analysis to the FPPC and requested formal written advice on behalf of Council Members Rob Rennie, Marico Sayoc and Barbara Spector regarding the 500-foot conflict of interest provisions of the Political Reform Act (Attachment 4). In February 2017, the FPPC responded and determined that the PRA conflict of interest provisions do not prohibit Council Member Rob Rennie, Barbara Spector, and Marico Sayoc from participating in decisions concerning the refund or waiver of fees (Attachment 5). D. Penalty Refund and Waiver Request Pursuant to the Town Code, the property owner who has unlawfully demolished a structure shall file the required applications, including the application fees and be subject to fines. The penalty requirement was adopted by the Town as a result of several unlawful demolitions of historic structures in the early 2000’s. CONCLUSION: Due to the precedent setting nature of the request and in accordance with Town Policy, staff recommends that the Council deny the refund request for 130 Massol Avenue and deny the request for waiver of demolition fines for 205 University Avenue. ALTERNATIVES: If Council disagrees with the staff recommendation, the Council may grant the request for the refund for 130 Massol Avenue and/or grant the request for waiver of demolition fines for 205 University Avenue. COORDINATION: The preparation of this report was coordinated with the Community Development Department and Finance Department Directors. PAGE 7 OF 7 SUBJECT: A. REQUEST FOR REFUND OF DEMOLITION FINE. 130 MASSOL AVENUE. PROPERTY OWNER: DIETER SCHMIDT. B. REQUEST FOR WAIVER OF DEMOLITION FINE. 205 UNIVERSITY AVENUE. PROPERTY OWNER: TAMI SHOOT. MARCH 16, 2017 S:\COUNCIL REPORTS\2017\03-21-17\Massol and University Fines\Staff Report FINAL.docx 3/16/2017 5:37 PM SLL FISCAL IMPACT: If the Council approves the refund, the total fiscal impact of the refunds requested is $82,950. The funding source for the refund will be General Fund revenues in the Town’s proposed FY 2017/18 Operating Budget. ENVIRONMENTAL ASSESSMENT: This is not a project defined under CEQA, and no further action is required. Attachments: 1. Request for refund of fines – 130 Massol Avenue 2. Request for waiver of demolition fines – 205 University Avenue 3. Payment of fines – 130 Massol Avenue 4. Town Attorney Communication to FPCC dated January 5, 2017 5. FPCC communication to Town dated February 6, 2017