Notes on the October 11th City Council Co-op Discussion

These notes are about the October 11th 2016 Boulder City Council Meeting – at which the City Council deliberated the details of the proposed Co-op Ordinance Second Reading.  Time codes are in reference to the council meeting video.  Notes and Observations by Diane, Steve.

Basically what happened at this meeting was that Council took up a number of questions that were spelled out by City Attorney Tom Carr, and more or less made decisions on how to revise the draft ordinance.

Ensure Real Co-ops – Certification (26:00)

  1. The City Manager shall have the authority to certify a legitimate co-op. The C.M. shall seek recommendations on certification from a 3rd party organization with expertise in co-ops.
  2. The ordinance shall include a limited set of criteria for a valid co-op. The C.M. shall be authorized to augment these with additional criteria.
  3. Third-party training of prospective co-op groups could be recommended.
  4. Changes in a co-op’s charter, membership, location, etc. must be reported to the C.M. within some reasonable period of time (TBD).
  5. Bi-annual “review” shall be conducted to make sure the co-op is still following the all the rules.

Straw poll 8-1 in favor (Lisa: no).

Notable Quotes:

Tom Carr: “Government can’t tell people how to live – we must find objectively verifiable criteria.”

Matt Appelbaum: “It’s one thing to have a charter that meets the criteria, and after the first group has a charter that meets the criteria, everybody can just copy that charter, and then everybody meets the criteria, and that’s the end of that!”

observations:

  1. Most of this is irrelevant. Whatever the “co-op criteria” are, they will be nothing but a series of hoops for people to jump through which can easily be faked (as Matt said but didn’t really follow up).
  2. There is an implication that the co-op certification must include the number of members and even the specific names of those members, and any changes in number or membership must be reported. We need to make sure this will be a matter of public record.   DC adds, also the license plates of the three permitted vehicles that can be parked on the street.  Also names of ecopass holders to make sure they buy neighborhood ecopasses where available.
  3. The discussion of who pays for the 3rd party’s work was vague – we want to make sure it is not the taxpayer. The co-op members should pay the 3rd party organization for the certification and training, and that should be separate from the license fee.
  4. Possible Legal Issue? City is not maintaining its direct responsibility to the citizens by inserting a third, non-elected entity into the certifying and monitoring process.  City is shirking its responsibility for enforcing its ordinance by relying on third party enforcement.  Given possible injury to existing neighbors, the city is negligent in maintaining its responsibility to make sure its actions cause no harm, and to promptly resolve any harm to neighbors.
  5. Possible legal issue?: City is creating a conflict of interest in allowing the certifying third party to educate and train and support the co-op group and write the agreement with the city and then also later monitor and enforce the agreement.
  6. Possible legal action? City is forcing neighbors to endure undue distress while awaiting solutions to identified problems by using too long a curing period.   Push for annual checkup and certification.  Push for 2 months to cure a problem which may require someone to find another residence and move out, otherwise, 1 month to cure a problem.  Neighbors deserve more prompt action.
  7. Life and safety inspections for all rental units, including rental co-ops should be performed every 2 years (not every four for rentals as currently). Inspection process remains the same, paid for by landlord, performed by certified third party using city checklist.  Reduce current cure period to 2 months for life and safety violations.  Increase fines substantially  ********  Diane insert here from discussion later in tape by Matt and others to increase fines to 1 month’s rent, and up.
  8. Compliance inspections for rental co-ops should be performed by a city enforcement staff person because these people are being granted a zoning exception based on their behavior, and grounded in an agreement with the city. Citizens need this assurance of monitoring and compliance.
  9. City should hire and maintain staff compliance officers to receive and resolve neighbors’ complaints. Complaints should be on file and part of the public record.  If a co-op licensee group receives more than 5 complaints in a 1 month period, that should trigger a full compliance inspection followed by a public hearing to resolve the issues and curing steps assigned and resolved.
  10. We should push for a pilot program lasting how long? Say two year initial certificate for a rental co-op, then a two year renewal possible?  Program review should be after 3 years, when sufficient data is available to judge the successes and failures of the program and readjust it.  Also, at that time could allow existing successful licensed rental co-ops to finish their fourth year and then leave their rental site.

Co-op Definitions (59:00)

Just three distinct types of co-ops shall be defined:

  1. “Group equity” co-op: The co-op property is owned and operated by a non-profit entity, and permanent affordability is required.  Presumably the co-op owner would rent living space to income-qualified tenants who agree to live by the co-op rules. (9-0 yes)
  2. “Private Equity” co-op: A supermajority (⅔ or ¾) of adult, non-dependent residents are owners,  where adult is defined as 18 or older, and possibly some rule that non-adult residents must bet be dependents of adult residents (i.e. no 17-year-old college kids).  Tom Carr will work on refining the definitions.
  3. “Rental” co-op: a group of people get together and obtain certification as a legitimate co-op, prior to renting a dwelling unit.   This co-op group then collectively shops for and leases a qualified dwelling unit from a private landlord.  (SM: Presumably the landlord must still give explicit written permission). The co-op group is free to move from one dwelling unit to another at will, without having to be recertified as a co-op.

Observations:

  • The discussion of “private equity” co-ops is getting confusing. The argument that some renters should be allowed to join the coop, due to life circumstances is being used to justify that only 67% of residents need to be owners.  But so far I have not heard any argument for why some percentage of ownership should be allowed with non-residents.
  • The category of “non-profit co-op” is very muddled. In the other two cases, there is a certification that the people who are going to be residents of the coop are a “legitimate coop.”  But for the case of a non-profit owned coop, it’s the non-profit that will get the coop license, before they even have any residents for the coop.  The whole process will be completely backwards.
  • A lot of the discussion about rental co-ops was dismissed by “it’s only 5 per year”, but as we know, that turned into 10 per year later in the evening. D comment — and up to 14 by the end of the evening.
  • The idea of rental co-ops not being a loophole for investor landlords to increase occupancy hinges on the idea of the co-op license belonging to the co-opers and not to the landlord. I think this leads to a lot of complication later:
    1. The co-op legitimacy certification is completely independent of the building health and safety inspection for the rental license. If a house has been inspected to be okay for an occupancy of 3 people – is it still okay for 12 people, or should a special health/safety inspection be required before the co-opers can move in?
    2. Fines for certain types of violations go to the coop, others go to the landlord – or both?
    3. Coop certification should be required before coopers can sign a lease or move in, not retroactive!
  • VERY IMPORTANT — Is it possible for investors to game the “non-profit” category? The CC keeps envisioning the only non-profit that will be owning property to be the BHP, but other non-profits could also come in, correct?  And is regulation for them tight enough to trust they won’t make undue returns, or their ownership if not tangled up with profit-making LLC’s, etc.

Parking (1:45:37)

  1. A co-op can have no more than 3 cars parked on-street, plus as many as they can fit off-street.
  2. A list of cars must be provided at the time of certification.
  3. Eco-pass required if they’re in a neighborhood eco-pass district.
  4. If the co-op is in an NPP district, NPP stickers are limited to 3

8-1 (Matt dissents)

Observations

  1. Three seems unfairly excessive for neighborhoods where you can barely park two cars on the street in front of a single house. Why can’t they tie it to the width of the lot on the street side, e.g. one car for every 15 feet of street space?
  2. If the list of cars is part of the certification, then any change in the cars would have to be updated with the certifier. D:  not with the certifier, with the CM!
  3. NPP discussion is useless, since most NPPs are only enforced 9-5 on weekdays.
  4. City isn’t going to be able to enforce this, they will count on neighbors to complain.
  5. Neighbors will need to have a list of the permitted license plates to police this for the city.

Notifications (1:53:53)

  1. A co-op shall be required to notify neighbors within some distance after the co-op has moved in to a property.
  2. Notification shall include contact information for at least one person within the co-op.

7-1 in favor (Lisa dissents, Mary defers)

Observations:

  1. Very little discussion on this topic. Except for Lisa, the rest of them are willing to let Burton and Brockett keep making the “sex offender” argument.   Burton says it’s “discrimination” but there’s no recognized affected class involved here, so who exactly is suffering from discrimination?
  2. About “discrimination”: apparently, we (the neighborhood residents) would be discriminating against co-ops based on their lifestyle choices or personalities.   Ironically, when the co-opers talk about how they choose new housemates (who respond to their craigslist ads), it’s all about lifestyle choice and personality – they will only accept someone who fits their particular lifestyle and philosophy.   Why do they get to manage their “intentional” community, but the neighbors get no say in the larger intentional community of the neighborhood?

Management Agreement Required? (1:58)

  1. The City Manager shall decide whether a management agreement is required.

There was really no discussion on this topicTom Carr’s explanation of what it meant was unclear.

observations:

I had heard from the co-opers that they regard this as some kind of magic way of guaranteeing that a co-op is “real” – basically they would be required to hire Lincoln Miller as a “management agent”.   They way they described it though was as a way to insert a layer of insulation between the neighbors and the city enforcement.   If a neighbor has a complaint, they would be required to complain to the “manager” first, who could get the violation “fixed” without getting the city involved (and thus not chalk up a “violation” count against the co-op)

Income Qualifications (1:59)

There shall be an income qualification requirement only for Group Equity co-ops owned by a non-profit organization.  Tom Carr will work out the exact specification for this, with input from BHP.

Observations:

  1. If there’s no income qualification for rental and equity co-ops, then it’s only a matter of time before luxury co-ops start taking over the market.
  2. This apparently applies only to tax-subsidized units, BHP-type. If a co=op can have partial non-profit ownership, do the other residents also have to comply with income qualifications? Can an LLC own part and BHP own part?  What if they have a disagreement? Who settles that?  Again, rip off possibilities?

Rent Limits  (2:02)

There shall be no limitations on rent for any type of co-ops.

Observations:

This was dismissed on the basis that the small number of co-ops won’t impact rental economics in the city.  There’s also an idea that with license belonging to the coop not the landlord, the coops will be able to shop around for lower rents.   To me this is bogus – no landlord is going to rent to a coop instead of a normal number of people unless he can get more money – so coops will find they have to offer rent higher than advertised in order to get a landlord’s agreement.   That’s okay with me.  And maybe the small numbers of possible coops will make it so that no landlord would go out of their way to plan for renting to a coop by adding bedrooms, etc.

Short Term Rentals (2:05)

A co-op shall not be allowed to obtain a short-term rental license.

Observations:

They glossed over the real issue here.  There needs to be stronger prohibition on co-ops hosting temporary “guests” on a regular basis, and specific penalties for violations – if they are caught advertising a short-term “housemate opportunity” on craigslist or couchsurfing.com (for example), they should be fined.   D comment:  This is why the names of all living in the co-op are available to the public record so neighbors can help notify CM if above stuff occurs.

Minimum Dwelling Unit size for a co-op (2:05)

  1. A rental co-op cannot occupy any dwelling unit with less than 2000 square feet of habitable interior space.
  2. There shall be no dwelling unit size requirement for either private equity or non-profit group equity co-ops.

Observations:

  1. If the reasoning for the minimum square footage is to limit neighborhood impact, why exempt equity and especially non-profit from this rule?
  2. Better make sure that if a house claims to be a certain size, then their property tax assessment must be based on that size.
  3. We need to check carefully what the definition of “habitable space” ends up being.
  4. Could a non-profit buy a house of any size and make it a co-op? Or can a non-profit rent a house for income limited people?  Needs more exploration.
  5. I didn’t get the full understanding of what measurement system they will use to determine habitability.

Number of people allowed to reside in a coop (2:15)

  1. A co-op shall be allowed to have up to 12 residents in a low-density residential zone
  2. A co-op shall be allowed to have up to 15 residents in any other zone
  3. A co-op shall be permitted to apply for a variance from the above, only if it will be a permanently affordable, deed-restricted co-op.

(5-4 pass  Sam, Matt: 12/12, Mary, Lisa: 8/10)

Quotes:

Lisa Morzel: “The biggest concern for a lot of people is that 12 or 15 people are going to move right next door to them, and there’s going to be a lot of resistance.  I don’t think we can shove this down people’s throats, and that’s what we’re trying to do here.”

Lisa Morzel: “This whole thing, that we’re doing this for affordability, in a way that’s pure B.S., because we’re not!”

Observations:

  1. The arguments for allowing 12 people are for affordability. There’s an assumption that landlords won’t demand much higher per-unit rent for 12 than they would for 3.   This is where the pure BS comes in.  Why wouldn’t a landlord double the rent or more?   Else why bother with a co-op?
  2. The justification for such a high number is that “experience” with “co-ops” shows that 12 or more people are needed to “make it work.” I wonder if there’s any documentation of this numbers experience?  Of course, the co-op organizations probably do have some cooked-up data that supports their conclusions.  D comment:  what is the desired amount of $ rent that the co-opers insist on paying?  We need to publicize that.
  3. Nothing to stop luxury co-ops (e.g. 6 google engineers go together on a $6000/month 3600 sqft house).
  4. Can you really squeeze 12 people into any 2000 sqft house? Shouldn’t there also be a limit based on actual legal bedrooms, e.g. minimum bedroom size of 70sqft for 1 person, 100sqft for 2 people etc. with 2 means of egress, etc.
  5. Jan Burton thinks they are listening to the neighborhoods by setting the 2000 sqft minimum house size. But they only applied that to rental coops – they let non-profit coops get away with no minimum size, so there’s really no protection here.
  6. Choosing numbers like 12 and 15 is a slap in the face to everyone who testified that the fundamental problem is the sheer number of people! A lot of us don’t want to live next door to twelve people, regardless of how quiet or polite they might be – it’s just too many people.  Jumping from 3 to 12 in low density neighborhoods is a 400% increase in density.
  7. Council never seems to acknowledge that whatever number they pick, the real number will be at least double that. There will be a constant flow of “guests” whether they be family, real friends, facebook contacts, couchsurfer exchanges, or craigslist vacationers.  Typically each adult coop resident will have one or more guests visiting at frequent intervals.   So 12 coopers will result in some weekends with a house full of 24 or more people at the same time.
  8. “Relatively more affordable” is wording used for rental co-ops — they don’t claim to be affordable housing. This is a very important comment.
  9. Allowing non-profits to apply for a variance ignores current neighbors.

Where should co-ops be allowed?

Co-ops shall be an allowed use in all zoning categories except “Public” and “Agriculture”.

Observations:

  1. Matt says no one will purpose-build co-op units in high density zones, it’s too much of a risk. But that’s assuming they are working under this current co-op ordinance draft with its limitations that are intended to protect neighborhoods.  But why not create an incentive for developers to build co-op-optimized units in these zones?  You could waive all limitations and license requirements for co-op units built in new development zones.

Concentration (2:56)

Note: a set of very misleading maps were produced by the Planning Department to (mis)guide this discussion.

No more than one co-op shall be allowed within a 500 foot radius, except where there’s a physical interruption in the neighborhood, such as an arterial highway, railroad, etc.).

Observations:

  • Would the 500 foot circle apply to the existing BHC “co-ops”? Since they are not really co-ops under the new ordinance, there could be a loophole there, with a new coop on the same block as Masala, for example.
  • In order to be fair, can we make the 500’ circle rule also include the BHC coops and other group homes, sororities/fraternities, etc.? comment:  Wow, really good idea for the hill.
  • Watch out for them to give the C.M. authority to grant exceptions – we need to force exceptions to go through public hearing.
  • Watch out for them to grant exceptions to existing illegal coops that are less than 500 ft apart.
  • Can we make it 1000 feet instead of 500?  The maps prepared by the planning department misrepresented the effects of the separation radius.
  • SUZANNE KEEPS PUSHING compromise for 400 ft. SHE IS SO BIASED TOWARD CO_OPS at every turn.  Watch out for her to argue for decreasing this later.

How Many co-ops should be allowed (per-year)? (3:26)

Up to ten co-ops of any type may be established in each (calendar?) year.   In addition, if no instances of a specific type of co-op have been established within the first 10 co-ops for the year, then up to two additional co-ops, of the specific type, may be established in that same year.  (9-0 in favor)

Observations:

  • 14 per year will basically be a total of 12 rental coops every year – combination of private rental and non-profit rental.
  • It would be ironic if the well-funded and well-organized BHP swoops in and grabs all 10 coop permits as soon as the season is opened, before the private rental groups like picklebric and radish get their applications filled out.

Annual Review of program effectiveness

The City Manager shall provide an annual report to Council to review the effectiveness of the co-op program.   The metrics to be reported shall be determined by the City Manager.

Observations:

  • If the council is going to periodically review this, one metric should be to get input from the neighbors of the licensed co-ops.

Additional Enforcement for Rental Units in General

This topic was discussed, but is not part of the co-op ordinance, so it’s put off to a later initiative.  In general, all of City Council agrees that enforcement of overoccupancy and other rental unit complaints must be improved through more staffing and higher fines.

Observations:

  • A lot of sound and fury about over-occupancy and general rental enforcement, signifying nothing. When they do get around to discussing this, big-money rental investors will swoop in and get it all watered down.

Additional Enforcement for Co-ops (3:36)

  • A single city-wide fine schedule for violations by co-ops should be established, and the lower amounts that had been specified in the earlier drafts shall be used ($150 first violation).

Observations:

  • A lot of backsliding and rationalization about enforcement against co-ops. There seems to be a belief that declaring an over-occupied house to be a “co-op” magically makes it okay.  They totally sidestepped the issue of enforcement of co-op rules.
  • In the case of violations by a rental co-op, it’s very muddled as to whether the fine goes to the landlord or to the co-op.
  • For fines against a co-op, is it per co-op or per person? If the fine for a co-op violation is $150 and it’s just one fine for the whole co-op then each person in the 12-person co-op just has to chip in 9 bucks.  Whoopee!

Pre-approval (4:04)

Property inspection for health and safety will be a separate process from the certification and licensing of a “co-op”.

Observations

  • They did not think this through at all.
  • If a rental property is licensed for occupancy 3, then a coop tries to lease it, shouldn’t it be reinspected to determine whether it’s up to code for 12 people? g. enough legal bedrooms of sufficient size, etc., per IRC or whatever.
  • If co-op group is pre-approved, does that mean they’ve taken one of the 10 co-op slots for the year? Is there some time limit for them to use it or lose it?

Equity Co-ops Supermajority (4:05)

A supermajority for ownership of a private equity coop shall be defined as ⅔ of the adult, non-dependent residents.

Follow-up

Continuation of second reading tentatively scheduled for Dec 6th.   Not a public hearing.  Tom Carr promises to post a revised draft sooner rather than later so that comments by email can be gotten.

Additional thoughts

  1. I don’t think they’ve addressed a process of grievance for co-op members or co-op applicants. What if a co-op member feels they’re not being treated fairly by other members, or gets kicked out without due process?  What if someone applies to join a co-op but gets rejected, and feels they’ve been discriminated against?
  2. Also, they didn’t close the equity co-ops supermajority issue completely. Awaiting legal advice from Tom on how to avoid equity co-ops of students whose parents bought the building.

[Return to the Co-op Ordinance Second Reading page]