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Fiscal Analysis of the Fair Rent and Home Ownership Initiative

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Fiscal Analysis of the Fair Rent and Home Ownership Initiative

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Fiscal Analysis of the Fair Rent and Home Ownership Initiative

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  1. Fiscal Analysisof theFair Rent and Home Ownership Initiative A Presentation to the Fillmore City Council June 23, 2006

  2. Background • May 12, 2009 – City receives notice of intention to circulate the Fair Rent and Home Ownership Initiative • June 10, 2009 – Ventura County Registrar of Voters certifies valid signatures • June 23, 2009 – Fillmore City Council orders a report on the Initiative • July 16, 2009 – Management Partners delivers a report on the fiscal impacts of the Initiative to the City • July 23, 2009 – Management Partners presents a report on the fiscal impacts of the Initiative to the City Council

  3. Overview of the Initiative Fair Rent and Home Ownership Initiative Four primary components Rent Control Limits rent increases based on changes in the consumer price index (CPI) for existing mobile home tenants only Households eligible for rent control must be very low or extremely low income Outlines a one-time process for determining “Qualified Tenants” 3

  4. Overview of the Initiative (continued) Subdivision and Condominium Conversions Excludes mobile home park conversions to resident ownership from the majority of City requirements Prohibits the City from imposing any condition on the approval of mobile home park conversions (except to remedy an existing health and safety violation) 4

  5. Overview of the Initiative (continued) Zoning for Mobile Home Parks Amends the City's General Plan Land Use Map to create a Mobile Home Exclusive land use designation Designates all properties in the City presently in use as a mobile home park as Mobile Home Exclusive 5

  6. Overview of the Initiative (continued) The Notice of Intent to Circulate Petition states that there will not be a cost impact to the City, specifically: “…the ‘Fair Rent and Home Ownership Initiative’ is designed to protect low income residents…without requiring any new fees or increasing the tax burden.” “The Fair Rent and Home Ownership Initiative is designed to protect and preserve mobile home parks as a source of affordable housing and protect low income residents, from rent increases…It does so legally in a balanced, fair manner, without forcing the taxpayers of Fillmore to pay the cost.” 6

  7. Fiscal Impact Analysis Includes Direct and indirect expenses Personnel costs based on the hourly rate of compensation and benefits for City employees Legal costs based on the City’s contract with Myers, Widders, Gibson, Jones & Schneider L.L.P. Observations All cost projections are conservative The lack of additional staffing capacity may cause specific tasks to be outsourced to contract employees or consultants, resulting in increased costs Unknown potential for legal costs with defending / implementing Initiative provisions Unknown potential for additional revenue from property tax associated with condominium conversations 7

  8. Establishment of a Rent Review Board or Rent Administrator “‘Current base rent’ or ‘current base space rent’ means base space rent as of the date this initiative measure is adopted plus the total of all rent increases approved or allowed by the rent review board or the rent administrator on or after January 1, 2010, pursuant to the provisions of this chapter” – Fair Rent and Home Ownership Initiative §7.37.020(2) Rent Control Cost 8

  9. Preparation and Mailing of Letters to all Mobile Home Park Residents “No later than January 31, 2010, all residents of mobilehome parks in the City of Fillmore will be given notice of their right to claim they are a Qualified Mobilehome Tenant within the meaning of this Ordinance, through service of a form to be approved by the City Manager ” – Fair Rent and Home Ownership Initiative §7.37.040(2) Rent Control Cost 9

  10. Preparation of Qualified Tenant Form “All residents claiming to be a Qualified Mobilehome Tenant must give notice to the City Manager and park owner…on a form to be approved by the City Manager…Such form shall require the tenant claiming to be a Qualified Mobilehome Tenant to supply documentation of their age, current income and disclose all real property or other mobilehomes owned by the tenant.” – Fair Rent and Home Ownership Initiative §7.37.040(3) Rent Control Cost 10

  11. Processing Park Owner Disputes of Qualified Tenant Forms “If a park owner intends to dispute any tenant’s claim of status as Qualified Tenant, the park owner must submit such objection to the City Manager; along with any documentation park owner believes tends to show that the applicant is not a Qualified Tenant.” – Fair Rent and Home Ownership Initiative §7.37.040(4) Rent Control Cost 11

  12. Scheduling and Conducting Hearings for Qualified Tenant Disputes “If the City Manager received an objection from a park owner as to a Qualified Tenant, the City Manager will set a hearing no less than 60 days after the City’s receipt of such objection for a determination of whether the tenant is a Qualified Tenant.” – Fair Rent and Home Ownership Initiative §7.37.040(5) Rent Control Cost 12

  13. Development of Rules and Procedures for the Qualified Tenant Hearings “The City Manager will establish administrative rules and procedures for the hearing on whether a tenant is a Qualified Tenant. The hearing need not follow the formal rules of evidence under California law, but the tenant and park owner shall have the right to call, examine and cross-examine witnesses and present documentary evidence. The tenant shall have the burden of proving the tenant is a Qualified Tenant.” – Fair Rent and Home Ownership Initiative §7.37.040(6) Rent Control Cost 13

  14. Summary of Fiscal Impact for Rent Control 14

  15. Mail Hearing Notices to all Tenants in the Proposed Project Area “…In addition, written notice shall be mailed by the city to all tenants residing in the project proposed to be converted not less than ten days prior to the hearing in the development permit.” – Fair Rent and Home Ownership Initiative §7.37.050(F) Subdivision or Condominium Conversion Cost 15

  16. “Thesubdivision and/or conversion of mobilehome parks to resident ownership shall be approved in accordance with the requirements of Government Code section 66427.5. The approval shall be subject to a hearing by the City Council…” – Fair Rent and Home Ownership Initiative §7.37.050(G)(2) Subdivision or Condominium Conversion Cost City Council Hearing for the Subdivision or Condominium Conversion of Mobile Home Parks to Resident Ownership 16

  17. “The City shall make available low and moderate income housing funds, as they may be available to assist qualifying residents in purchasing their lots or condominium interest.” – Fair Rent and Home Ownership Initiative §7.37.050(G)(3) Subdivision or Condominium Conversion Cost Financial Assistance to Help Low and Moderate Income Households Purchase Mobile Home Lots and Condominiums 17

  18. Summary of Fiscal Impact for Subdivision or Condominium Conversions 18

  19. BenchmarkingRent Control Administration Costs • Jurisdictions surveyed • City of Palm Springs • City of Oxnard • City of Thousand Oaks • City of Ventura • Staffing allocation for administration ranged from 0.25 to 1.00 full-time equivalent employees • Based on Fillmore’s labor cost, such a commitment could cost between $25,062 and $100,247 annually 19

  20. BenchmarkingRent Control Administration Fees • Cities with Rent Control Administration Fees • City of Palm Springs • City of Oxnard • City of Thousand Oaks • Fees range from $10 to $28 annually per mobile home rental space • Annual revenue ranges from $10,570 to $75,000 • Based on the Palm Springs’ fee schedule, a Fillmore Rent Control Administration fee will raise $4,000 annually 20

  21. Conclusion • The Initiative requires a variety of actions by the City of Fillmore. All have associated costs • Independent evaluation of costs associated with carrying out terms of the Initiative indicate that expenses will range from a minimum of $30,000 to $104,000 in 2010 depending on the number of disputed qualified tenant applications • Ongoing rent control administration costs in subsequent years will range from $5,000 to $13,470 • Benchmarking confirms independent costing analysis • The City has limited ability to recoup these costs by imposing new fees • Each subdivision or condominium conversion application is estimated to cost between $1,600 and $1,650 21

  22. Thank You Questions? 22