Council to vote on condo conversion regulations

The City Council was scheduled to vote at its Feb. 9 meeting on a proposed ordinance that would set restrictions on condo conversions.

The meeting took place after this issue of the Southwest Journal went to press.

Under the proposed ordinance change, anyone who wants to convert a condominium will need to apply for a permit from the city's Department of Regulatory Services and receive the city's approval before they are allowed to proceed with the project. The permit will cost $2,000 for the first unit to be converted and $800 for each additional unit.

The applicant will need to provide in the permit, among other things, a description of all repairs and improvements to be made, the number of units that will be affected, the current rent and the projected purchase price of the converted unit. The applicant also needs to commit to establishing a reserve fund that would be used to cover the replacement of the condo's common elements. In addition, the applicant needs to commit to obtaining a truth-in-housing report for individual units before they're sold and to provide relocation assistance to eligible residents. Some residents will be eligible for a relocation payment equivalent to three months' rent.

The proposed ordinance, authored by Council Member Cam Gordon (2nd Ward), aims to prevent the loss of affordable rental units to condo conversions. The ordinance notes that according to the 2005-2009 Minneapolis Consolidated Plan, the city has a shortage of 13,499 units of housing affordable to households earning below 30 percent of the Metropolitan Median Income. The ordinance also uses statistics from the city's Community Planning and Economic Development (CPED) department to note that at least 283 affordable units were converted between 2001 and 2005, or 23 percent of the total conversions in that time frame.

At a Jan. 31 meeting of the city's Public Safety and Regulatory Services Committee, which included hours of public testimony from residents split on the issue, Gordon said the ordinance also aims to protect tenants and condo buyers by setting stringent standards. But other council members raised concerns about how restricting condo conversions would help increase the stock of affordable homeownership opportunities in the city and how the city would pay to enforce the ordinance.

Last year, 42 buildings in Minneapolis that included a total of 308 units were converted to condos, Burt Osborne, the city's director of operations, business licensing and environmental management, told committee members. If the condo conversion permit fee had been in place last year, it would have generated $300,000-$350,000, he said.

However, Osborne noted and the staff report on the ordinance states that in order to implement and enforce the ordinance, three additional staff members would need to be hired. The fees generated by the condo conversion permits would be enough to cover personnel costs, but those staff members would also need office space, computers and phones, as well as a car, phone and laptop for the code compliance officer who will enforce the ordinance.

Council committee members were split 3-3 on the ordinance, meaning it technically failed in committee. But they agreed to send it forward to the City Council for a full review.

If approved, the ordinance would go into effect on Aug. 1.

Proposal at a Glance

– Anyone who wants to convert a building into condominiums will need to apply for a permit from the Department of Regulatory Services

– Permit will cost $2,000 for the first unit to be converted and $800 for each additional unit

– To receive a permit, the applicant must provide:

- Description of all repairs and improvements to be made- Number of units that will be affected- Current rent- Projected price of each converted unit

The applicant must also commit to:

- Establishing a reserve fund that would be used to cover the replacement of the condo's common elements

- Obtaining a truth-in-housing report for individual units before they're sold

- Providing relocation assistance to eligible residents

– If approved by the City Council, the ordinance would go into effect Aug. 1

Reach Kari VanDerVeen at kvanderveen@mnpubs.com or 436-4373.