On January 26 the PTCA Board of Directors approved a new rule regarding rental units, to be placed into the Rules and Regulations Handbook and to be effective March 1, 2015. The entire Handbook can be viewed online and downloaded from the Library section of our website, www.ptcondo.com.
Currently, about 37% of the building’s original residential units are rentals, with the residents of those units comprising about 42% of our total population.
Board and management have come to believe that it would serve our Association well to reduce those percentages — that by so doing we would lower our operating costs, improve the resale value of our units, and improve the quality of life for everyone living at Park Tower.
With those goals in mind, the board this past summer appointed an Ad Hoc Rental Policy Committee to study the issues and come up with an effective, sensible approach.
The committee convened in the summer and over several meetings, interspersed by considerable research, developed the proposals underlying the recent amendment to the Association’s Rules and Regulations Handbook.
As a member of that committee – the others are named at the end of this story — I’d like to explain the thinking that supports the amended rule, starting with quality of life issues.
The quality of life here at Park Tower is dependent on many things large and small, physical and psychological, financial and social. Most important are the interactions among and between residents and/or staff. When we treat one another well, and respect and cooperate with one another, then we build a more caring community and a better place to live.
Relationships take time to develop. While the exception may prove the rule, the committee became persuaded that long term residents generally feel invested in the building – which, of course, they are in a financial sense, also – and usually get to know and appreciate their neighbors.
When units turn over frequently, as most rentals do, those relationships scarcely have time to develop. Management reports that despite special efforts to inform them, renters frequently overlook or misunderstand building policies and procedures; and that short-term residents are more likely to find themselves in contention with their neighbors, staff and building employees.
Rental units vary greatly in condition just as do owner-occupied units. Some are exceedingly well-maintained, but a disproportionate share have ongoing maintenance issues. Non-resident landlords, in particular, may be less available to their tenants and to management, less current with Association activities, and less hands-on with their units.
In any event, when you add these maintenance issues to the inevitable wear and tear on elevators and other building infrastructure, the bottom line seems to be that the rental units are something of a drain on building resources.
In laying the groundwork for the amended rule, great effort was invested in coming up with one that was onerous neither to current owner-landlords, who bought rental units under rules different from the current one, nor to current tenants, who may wish to continue living at Park Tower. And because the committee is confident that a responsible limit on rental units will increase property values, it wanted to discourage any ‘fire-sale” mentality suggesting the opposite.
Briefly, the rule sets the desired percentage of rented residential units at not more than 30%, to be achieved and then maintained by the means stated. The rule does not apply to the commercial units in the mall, nor to residential units rented from the Association through the Board of Directors.
Landlords who wish to continue renting the units they rent out now may do so. Tenants in units that are sold may remain in those units if they and the new owners wish to continue that arrangement.
New owners may not rent out those units until they themselves have lived in the building as their primary residence (whether in the unit in question or a different one) for at least two years.
New original leases must be for a term of 2-years, with an option to break the lease at 1-year, given a 60-day notice from either party.
A hardship clause allows for the board to make exceptions to the rule due to unusual circumstances.
A waitlist to rent will be created and maintained by management when: (1) the percentage of rental is above 30%; and (2) a new owner requests permission to rent that unit. An owner intending to purchase and/or rent a unit he has not previously rented out will be subject to both the 30% rule and the 2-year residency requirement.
The rule is enforced by a rule violation clause that allows the Board to fine a unit owner in violation.
I’ll mention here that the committee briefly considered altering our Declaration instead of amending the rule. Had it been done that way, we might have added further restrictions, such as limiting unit owners to a maximum of five, regardless of the purpose intended. But because the Declaration is subject to additional restrictions and is so much more difficult to change, the choice came down to the Rules and Regulations or not at all.
The effect of the new rule is to stop immediately the leasing of units not currently on the market and to slowly decrease the percentage of units leased, until the percentage of rental units at Park Tower is at 30% or lower. This is accomplished without requiring current landlords to sell or current tenants to move.
Finally, it’s important to say again that the committee recognizes that many landlords are actively improving their properties, which is good for everyone’s property values, and that current long-term tenants are valuable to our community.
by Sheldon Atovsky
Ad-hoc Rental Policy Committee members were Jean Shamo. chair; Patty Abbaszadeh, Ken Anderson, Sheldon Atovsky, Steve Koga, Sherman Lundy, Sharon Partner, and Mary Toosi. The board liaison was George Pauley and Tim Patricio represented management.