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HomeMy WebLinkAboutPacket for CC 11-20-23 MEMORANDUM Date: November 9, 2023 To: Carmel City Council From: Adrienne Keeling Re: Ordinance Z-686-23 HOA Rental Restriction UDO Amendment Forwarded with a favorable recommendation from Carmel Plan Commission: Ordinance Z-686-23 (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. While we are not aware of any Carmel neighborhoods where this has occurred, it has been a growing concern in some of our neighboring communities. The presence of rentals isn’t inherently bad; however, these bulk purchases of single-family homes by investment firms can make it more difficult for individuals to purchase a home by decreasing the supply of for-sale 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: See blue text in the attached UDO amendment. 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 a majority (50%+1) 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. Plan Commission Overview: The Plan Commission discussed the intent and technical details of the ordinance, including (1) if 50% consent vs. 50%+1 votes should be required, (2) whether this threshold should apply to both the creation and potential reduction of rental restrictions, and (3) whether Commercial Subdivisions should be subject to these provisions. After a few revisions, the Plan Commission voted to send this proposal to City Council with a favorable recommendation. The information in this packet is arranged in the following order: 1. Plan Commission Certification (expires January 28, 2024) 2. Proposed Ordinance Z-686-23 CERTIFICATION OF THE CARMEL PLAN COMMISSION’S RECOMMENDATION ON THE PETITION TO THE CITY OF CARMEL TO AMEND THE ZONING ORDINANCE PURSUANT TO INDIANA CODE 36-7-4-605 ORDINANCE Z-686-23 HOA Rental Restrictions Amendment To: The Honorable Common Council Of the City of Carmel Hamilton County, Indiana Dear Members: The Carmel Plan Commission offers you the following report on the application Docket No. PZ-2023-00166 OA - petitioning 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 members. The Carmel Plan Commission’s Commercial Committee recommendation on the petition of the applicant is ‘Favorable.” At its regularly scheduled meeting on October 17, 2023, the Carmel Plan Commission voted Six (6) in Favor, Zero (0) Opposed, Three (3) Absent, to forward to the Common Council the proposed Ordinance No. Z-686-23 with a “Favorable Recommendation”. Please be advised that by virtue of the Plan Commission’s Favorable Recommendation, pursuant to IC 36-7-4-607(e), the Council has ninety (90) days to act on this petition before it becomes effective as Certified by the Commission. Ninety days from the date of the Certification is Sunday, January 28, 2024. CARMEL PLAN COMMISSION BY: _____________________________________ Brad Grabow, President ATTEST: _____________________________________ Joe Shestak, Secretary Carmel Plan Commission Dated: October 30, 2023 11/09/2023 Ordinance Z-686-23 1 Sponsor: Councilors Campbell, Aasen and Finkam 1 2 ORDINANCE Z-686-23 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 no more than 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 favorable 24 recommendation from the Carmel Advisory Plan Commission on Tuesday, October 17, 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 11/09/2023 Ordinance Z-686-23 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, the 64 governing documents may not require the consent of more than the majority (50%+1) of all 65 owners to create or amend provisions relating to rental restrictions. This paragraph does not 66 apply to Commercial Subdivisions (CM). 67 C. Contractual Obligations: Prior to the transition from the developer to the owners’ association 68 being responsible for common property and/or common facilities, the developer shall not enter 69 into any contractual obligation on behalf of the owners’ association that extends more than one 70 (1) year past the date of transition. Thereafter, the owners’ association shall be responsible for 71 the renewal or termination of such contracts. 72 D. Common Area Inspection: Before the developer transfers control of the owners’ association 73 under the Declaration of Covenants to the property owners, including control of a board of 74 directors or other means of representation, the developer shall arrange for an inspection of all 75 improvements not located on a platted lot or for which the owners’ association has 76 maintenance responsibility (a “Common Area Improvement”), including street trees. For 77 purposes of this section, whenever another person or persons succeeds to the rights and 78 liabilities of the original applicant, the term “developer” includes successors and assigns of the 79 original applicant. 80 1. Inspection Requirements: Such inspection shall (i) be performed by an independent, 81 licensed professional engineer or land surveyor selected and paid for by the developer, and 82 (ii) determine whether each approved and/or committed Common Area Improvement has 83 been completed and maintained and is currently in compliance with all applicable 84 requirements of the City of Carmel, the Hamilton County Surveyor’s office; and any other 85 applicable governmental authority or utility. 86 2. Inspection Report: A reasonably detailed report of the inspection shall be provided to the 87 Carmel Department of Community Services. Upon written confirmation by the department 88 that the inspection demonstrates that all Common Area Improvements have been properly 89 completed and maintained, the developer may then turn over control of the owners’ 90 association to the property owners. 91 3. Corrections: If the inspection reveals that any Common Area Improvements have not been 92 properly completed and/or maintained, the developer shall cause, at its cost, all such 93 improper Common Area Improvements to be corrected so as to be in compliance with 94 11/09/2023 Ordinance Z-686-23 3 applicable requirements. Upon completion of such correction, the developer shall notify the 95 department in writing of details of the corrections made. The department shall have thirty 96 (30) days from the date of notice of completion of corrections to verify compliance. 97 Thereafter, upon receipt of notice from the department that all the improper Common Area 98 Improvements have been corrected, the developer may turn over control of the owners’ 99 association to the property owners. 100 4. Failure to Respond: If the department fails to respond to an inspection that shows no 101 improper Common Area Improvements or to a notice from developer of its correction of all 102 improper Common Area Improvements within thirty (30) days of receipt of such inspection 103 or notice, as applicable, then the developer may assume department approval and turn over 104 control of the owners’ association to the property owners. 105 E. Required Language: The following content shall be reflected in the Deed Restriction or other legal 106 mechanism: 107 1. Street Lighting: When a development installs a street light, then the owners’ association 108 shall be responsible for the maintenance, replacement, and electricity used. In this case, the 109 legal mechanism shall make the owners’ association responsible for all maintenance, 110 replacement, and electricity consumption in perpetuity. The City of Carmel shall not, now or 111 in the future, be obligated to accept the lights as public property. In the event the owners’ 112 association fails to maintain street lighting, the City of Carmel may make the improvements 113 and assess each property for the project cost plus applicable administrative expenses. 114 2. Detention, Drainage Systems, and Best Management Practices: When a retention pond 115 and/or other drainage systems are required or installed and established as common area, the 116 City of Carmel shall not, now or in the future, be obligated to accept them as public 117 infrastructure or to maintain those facilities. The owners’ association, or lot owner of the lot 118 in which the retention pond or other drainage system is located, shall bear the cost of such 119 maintenance. In the event the owners’ association fails to maintain the retention pond and/or 120 other drainage facilities, the City of Carmel may make the improvements and assess each 121 property in the subdivision equally for the project cost plus administration costs. 122 3. Private Streets: When private streets are installed, the City of Carmel shall not, now or in 123 the future, be obligated to accept private streets as public property. The City of Carmel shall 124 bear no financial responsibility for snow removal, maintenance or replacement costs 125 associated with private streets. The owners’ association shall bear the cost of snow removal, 126 maintenance and replacement. In the event the owners’ association fails to maintain private 127 streets, the City of Carmel may make the improvements and assess each property for the 128 project cost plus administration costs. 129 4. Off‑street Trails: When trails are installed outside of a right-of-way, the City of Carmel shall 130 not, now or in the future, be obligated to accept the trail as public property. The City of 131 Carmel shall bear no financial responsibility for maintenance or replacement costs. The 132 owners’ association shall bear the cost of maintenance and replacement. In the event the 133 owners’ association fails to maintain the trail, the City of Carmel may make the 134 improvements and assess each property for the project cost. 135 5. On‑street Sidewalks: When sidewalks are installed inside of a right-of-way of internal 136 streets, the City of Carmel shall bear no financial responsibility for maintenance or 137 replacement costs. The owners’ association, and particularly abutting property owners shall 138 bear the cost of maintenance and replacement. In the event the owners’ association, or 139 abutting property owners, fails to maintain the sidewalks, the City of Carmel may complete 140 the maintenance work or make the improvements and assess the appropriate property 141 owners for the project cost. 142 6. Landscaping: When landscaping is required to be or elected to be installed in a right-of-143 way, common area or easement, the owners’ association shall be responsible for maintaining 144 11/09/2023 Ordinance Z-686-23 4 the plant material in healthy condition, removing dead or diseased vegetation, and/or 145 replacing landscaping, as necessary. Required perimeter land- scaping shall be maintained 146 by the owners’ association as approved by the Plan Commission; or in a manner equal to or 147 in excess of what was approved if permitted by the Planning Administrator. See Section 148 7:06: Common Area Standards for more information. 149 7. Street Trees: Once a final plat is approved, the right-of-way becomes the property of the 150 City of Carmel. Therefore, the City retains the right to reasonably trim or remove any tree or 151 shrub impeding the street or sidewalk. When performing essential infrastructure work, the 152 City of Carmel may remove trees or shrubs within the right-of-way and shall not be 153 responsible for replacing said trees. The City of Carmel shall approve any new tree or shrub 154 being planted within the right-of-way and can deny such planting for any reason. 155 F. Enforcement: Failure of the owners’ association to maintain an effective legal mechanism or 156 failure of the owners’ association to fulfill its responsibilities within that legal mechanism shall 157 be deemed a violation of the Unified Development Ordinances and subject to Article 10: 158 Enforcement and Penalties. 159 160 11/09/2023 Ordinance Z-686-23 5 PASSED, by the Common Council of the City of Carmel, Indiana, this ____ day of ________, 2023, 161 by a vote of _____ ayes and _____ nays. 162 163 COMMON COUNCIL FOR THE CITY OF CARMEL 164 165 166 ___________________________________ 167 Jeff Worrell, President Laura Campbell, Vice-President 168 169 ___________________________________ ____________________________________ 170 Kevin Rider Sue Finkam 171 172 ___________________________________ ____________________________________ 173 Anthony Green Adam Aasen 174 175 ___________________________________ ___________________________________ 176 Tim Hannon Miles Nelson 177 178 ___________________________________ 179 Teresa Ayers 180 181 ATTEST: 182 183 __________________________________ 184 Sue Wolfgang, Clerk 185 186 Presented by me to the Mayor of the City of Carmel, Indiana this ____ day of 187 _________________________ 2023, at _______ __.M. 188 189 ____________________________________ 190 Sue Wolfgang, Clerk 191 192 Approved by me, Mayor of the City of Carmel, Indiana, this _____ day of 193 ________________________ 2023, at _______ __.M. 194 195 ____________________________________ 196 James Brainard, Mayor 197 ATTEST: 198 199 ___________________________________ 200 Sue Wolfgang, Clerk 201 202 203 Prepared by: 204 Adrienne Keeling, Planning Administrator, One Civic Square, Carmel, IN 46032 205