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HomeMy WebLinkAboutPacket for PC 09-19-23 MEMORANDUM Date: September 8, 2023 To: Carmel Plan Commission From: Adrienne Keeling Re: Docket No. PZ-2023-00166 OA HOA Rental Restriction Amendment Enclosed is a Draft UDO Amendment for the below item. If you have any questions, please call 571-2417. Docket No. PZ-2023-00166 OA: HOA Rental Restrictions Amendment The applicant seeks to amend the Unified Development Ordinance in order to require that Owners’ Association governing documents allow changes to rental restrictions with a simple majority vote of the owners. Filed by the Department of Community Services on behalf of the Carmel Plan Commission. Background: Over the last several years, large, out-of-state investment firms have purchased a significant number of owner- occupied, single-family homes across Indiana for the purpose of turning them into rental properties. These bulk purchases of single-family homes by investment firms makes it more difficult for a person to purchase a home and decreases the number of owner-occupied homes in a community. Subdivisions may choose to place rental restrictions in their declaration of covenants or other homeowners’ association governing documents. However, each subdivision is responsible for the process to amend said governing document, which may require the consent of up to 75% of the owners in accordance with Indiana Code Section 32-25.5-3-9. Proposed Ordinance Summary: The proposed amendment adds a new “Amendment of Covenants” paragraph to UDO Section 7.20: Owners’ Association Standards. It specifically acknowledges the Indiana Code section referenced above but goes on to specify that no more than 50% of the owners shall be required to consent to an amendment of the governing documents specifically relating to rental restrictions. NOTE: If adopted, this ordinance DOES NOT AMEND any covenants or governing documents of an existing subdivision, nor does it require subdivisions to adopt rental restrictions. This would only apply to newly formed subdivisions/owners’ associations established after the effective date of this ordinance. You may view the Unified Development Ordinance (UDO) in its entirety online by clicking on Zoning Map & Tools in the Department of Community Services’ website: www.carmeldocs.com. 09/08/2023 Ordinance Z-6XX-23 1 Sponsor: Councilor ___________ 1 2 ORDINANCE Z-6XX-23 3 AN ORDINANCE OF THE COMMON COUNCIL OF THE 4 CITY OF CARMEL, INDIANA 5 ___________________________________________________ 6 An Ordinance updating owners’ association standards in the Unified Development Ordinance. 7 8 Synopsis: 9 This ordinance requires that owners’ associations allow changes to governing documents relating to 10 rental restrictions with a simple majority of its owners. 11 12 WHEREAS, over the last several years, large, out-of-state investment firms have purchased a 13 significant number of owner-occupied, single-family homes across Indiana for the purpose of turning them into 14 rental properties; and 15 WHEREAS, such bulk purchasing of single-family homes by investment firms makes it more difficult 16 for a person to purchase a home and decreases the number of owner-occupied homes in a community; and 17 WHEREAS, pursuant to Indiana Code § 36-7-4-602, the Common Council has the authority to amend 18 the text of the Carmel Unified Development Ordinance (the “UDO”); and 19 WHEREAS, it is in the best interest of the citizens of the City of Carmel to amend the text of the UDO 20 to require that the governing documents of newly formed homeowners associations contain a provision that 21 makes it easier for owners within said associations to restrict rentals if they so desire. 22 NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of Carmel, Indiana, 23 that, pursuant to IC 36-7-4-600 et seq. and after Docket No. PZ-2023-00166 OA having received a _______ 24 recommendation from the Carmel Advisory Plan Commission on Tuesday, _______, 2023, it hereby adopts 25 this Ordinance to amend the Carmel Unified Development Ordinance (Ordinance Z-625-17, as amended), to 26 read as follows: 27 28 Section I: Amend Article 7: Design Standards, Section 7.20: Owners’ Association Standards, as follows: 29 30 7.20 Owners’ Association Standards Page 7-29 31 This Owners’ Association Standards (OA) section applies to the following types of development: 32 CS, RS, TS, CM 33 A. Applicability: Any development with common area, private streets, shared parking, an amenity 34 center, shared or private utilities, retention pond, and the like shall meet the Owners’ 35 Association Standards. 36 B. Establishment of Owners’ Association: 37 1. Perpetuity: An owners’ association shall be created in perpetuity to make decisions about 38 and to maintain all common property and/or common facilities. 39 2. Organization: An owners’ association shall be a legally incorporated entity or shall be 40 created by other legal mechanism which provides shared ownership or shared responsibility 41 of common property and/or common facilities. A board of directors or other means for 42 representation in decision-making shall be established. 43 3. Recording of Legal Mechanism: The legal mechanism binding all property owners or 44 vested parties shall be recorded in the Office of the Hamilton County Recorder. 45 09/08/2023 Ordinance Z-6XX-23 2 4. Declaration of Covenants: The owners’ association shall be responsible for the 46 administration of any elective restrictive covenant utilized to further restrict improvements 47 and uses in the development. The “Declaration of Covenants” shall be recorded in the Office 48 of the Hamilton County Recorder following final plat approval and prior to selling any lots 49 or units. A copy of the recorded document shall be delivered to the Department of 50 Community Services within two (2) weeks of it being recorded. 51 5. Deed Restrictions: All requirements (See Section 7.20(E): Required Language below) or 52 other restrictions that resulted as a commitment or condition of approval shall be included in 53 an independent legal document (e.g. deed restriction or similar legal mechanism) and 54 recorded for each lot. 55 6. Association Fee: An association fee or other financial mechanism shall be included in the 56 Declaration of Covenants or other legal mechanism and be equal to the financial needs of the 57 owners’ association to maintain common property and/or common facilities, and to 58 accumulate a reserve account for long-term large expenditures, emergencies, and 59 contingencies. 60 7. Amendment of Covenants: In accordance with IC 32-25.5-3-9, the governing documents of 61 the owners’ association must contain a provision allowing the owners to amend the 62 governing documents at any time, from time to time and such amendment may not require 63 the consent of more than seventy-five percent (75%) of all owners; provided, however, 64 amendment to the governing documents specifically involving changes relating to rental 65 restrictions may not require the consent of more than fifty percent (50%) of all owners. 66 C. Contractual Obligations: Prior to the transition from the developer to the owners’ association 67 being responsible for common property and/or common facilities, the developer shall not enter 68 into any contractual obligation on behalf of the owners’ association that extends more than one 69 (1) year past the date of transition. Thereafter, the owners’ association shall be responsible for 70 the renewal or termination of such contracts. 71 D. Common Area Inspection: Before the developer transfers control of the owners’ association 72 under the Declaration of Covenants to the property owners, including control of a board of 73 directors or other means of representation, the developer shall arrange for an inspection of all 74 improvements not located on a platted lot or for which the owners’ association has 75 maintenance responsibility (a “Common Area Improvement”), including street trees. For 76 purposes of this section, whenever another person or persons succeeds to the rights and 77 liabilities of the original applicant, the term “developer” includes successors and assigns of the 78 original applicant. 79 1. Inspection Requirements: Such inspection shall (i) be performed by an independent, 80 licensed professional engineer or land surveyor selected and paid for by the developer, and 81 (ii) determine whether each approved and/or committed Common Area Improvement has 82 been completed and maintained and is currently in compliance with all applicable 83 requirements of the City of Carmel, the Hamilton County Surveyor’s office; and any other 84 applicable governmental authority or utility. 85 2. Inspection Report: A reasonably detailed report of the inspection shall be provided to the 86 Carmel Department of Community Services. Upon written confirmation by the department 87 that the inspection demonstrates that all Common Area Improvements have been properly 88 completed and maintained, the developer may then turn over control of the owners’ 89 association to the property owners. 90 3. Corrections: If the inspection reveals that any Common Area Improvements have not been 91 properly completed and/or maintained, the developer shall cause, at its cost, all such 92 improper Common Area Improvements to be corrected so as to be in compliance with 93 applicable requirements. Upon completion of such correction, the developer shall notify the 94 09/08/2023 Ordinance Z-6XX-23 3 department in writing of details of the corrections made. The department shall have thirty 95 (30) days from the date of notice of completion of corrections to verify compliance. 96 Thereafter, upon receipt of notice from the department that all the improper Common Area 97 Improvements have been corrected, the developer may turn over control of the owners’ 98 association to the property owners. 99 4. Failure to Respond: If the department fails to respond to an inspection that shows no 100 improper Common Area Improvements or to a notice from developer of its correction of all 101 improper Common Area Improvements within thirty (30) days of receipt of such inspection 102 or notice, as applicable, then the developer may assume department approval and turn over 103 control of the owners’ association to the property owners. 104 E. Required Language: The following content shall be reflected in the Deed Restriction or other legal 105 mechanism: 106 1. Street Lighting: When a development installs a street light, then the owners’ association 107 shall be responsible for the maintenance, replacement, and electricity used. In this case, the 108 legal mechanism shall make the owners’ association responsible for all maintenance, 109 replacement, and electricity consumption in perpetuity. The City of Carmel shall not, now or 110 in the future, be obligated to accept the lights as public property. In the event the owners’ 111 association fails to maintain street lighting, the City of Carmel may make the improvements 112 and assess each property for the project cost plus applicable administrative expenses. 113 2. Detention, Drainage Systems, and Best Management Practices: When a retention pond 114 and/or other drainage systems are required or installed and established as common area, the 115 City of Carmel shall not, now or in the future, be obligated to accept them as public 116 infrastructure or to maintain those facilities. The owners’ association, or lot owner of the lot 117 in which the retention pond or other drainage system is located, shall bear the cost of such 118 maintenance. In the event the owners’ association fails to maintain the retention pond and/or 119 other drainage facilities, the City of Carmel may make the improvements and assess each 120 property in the subdivision equally for the project cost plus administration costs. 121 3. Private Streets: When private streets are installed, the City of Carmel shall not, now or in 122 the future, be obligated to accept private streets as public property. The City of Carmel shall 123 bear no financial responsibility for snow removal, maintenance or replacement costs 124 associated with private streets. The owners’ association shall bear the cost of snow removal, 125 maintenance and replacement. In the event the owners’ association fails to maintain private 126 streets, the City of Carmel may make the improvements and assess each property for the 127 project cost plus administration costs. 128 4. Off‑street Trails: When trails are installed outside of a right-of-way, the City of Carmel shall 129 not, now or in the future, be obligated to accept the trail as public property. The City of 130 Carmel shall bear no financial responsibility for maintenance or replacement costs. The 131 owners’ association shall bear the cost of maintenance and replacement. In the event the 132 owners’ association fails to maintain the trail, the City of Carmel may make the 133 improvements and assess each property for the project cost. 134 5. On‑street Sidewalks: When sidewalks are installed inside of a right-of-way of internal 135 streets, the City of Carmel shall bear no financial responsibility for maintenance or 136 replacement costs. The owners’ association, and particularly abutting property owners shall 137 bear the cost of maintenance and replacement. In the event the owners’ association, or 138 abutting property owners, fails to maintain the sidewalks, the City of Carmel may complete 139 the maintenance work or make the improvements and assess the appropriate property 140 owners for the project cost. 141 6. Landscaping: When landscaping is required to be or elected to be installed in a right-of-142 way, common area or easement, the owners’ association shall be responsible for maintaining 143 the plant material in healthy condition, removing dead or diseased vegetation, and/or 144 09/08/2023 Ordinance Z-6XX-23 4 replacing landscaping, as necessary. Required perimeter land- scaping shall be maintained 145 by the owners’ association as approved by the Plan Commission; or in a manner equal to or 146 in excess of what was approved if permitted by the Planning Administrator. See Section 147 7:06: Common Area Standards for more information. 148 7. Street Trees: Once a final plat is approved, the right-of-way becomes the property of the 149 City of Carmel. Therefore, the City retains the right to reasonably trim or remove any tree or 150 shrub impeding the street or sidewalk. When performing essential infrastructure work, the 151 City of Carmel may remove trees or shrubs within the right-of-way and shall not be 152 responsible for replacing said trees. The City of Carmel shall approve any new tree or shrub 153 being planted within the right-of-way and can deny such planting for any reason. 154 F. Enforcement: Failure of the owners’ association to maintain an effective legal mechanism or 155 failure of the owners’ association to fulfill its responsibilities within that legal mechanism shall 156 be deemed a violation of the Unified Development Ordinances and subject to Article 10: 157 Enforcement and Penalties. 158 159 160 161 Prepared by: 162 Adrienne Keeling, Planning Administrator, One Civic Square, Carmel, IN 46032 163