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V.1. First Reading: Ordinance Amending Chapter IV of the Hopkins City Code Pertaining to the Sale of Affordable Rental Housing; YoungquistCITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA ORDINANCE NO. 2019-1141 AN ORDINANCE AMENDING CHAPTER IV OF THE HOPKINS CITY CODE PERTAINING TO THE SALE OF AFFORDABLE RENTAL HOUSING THE COUNCIL OF THE CITY OF HOPKINS HEREBY ORDAINS AS FOLLOWS: Section 1. That Chapter IV of the Hopkins City Code is amended by adding Section 460 as follows: Section 460 – Sale of Affordable Rental Housing Building 460.00 Purpose. It is the purpose of this Section to provide housing stability and protection to tenants in affordable rental housing units who are facing displacement when there is a transfer of ownership of an affordable housing building. This Section requires, upon such a transfer, notice to the tenants and the City and the payment of tenant relocation assistance when affordable housing is converted and tenants are required, through direct or indirect means, to move without adequate time to find new housing. This Section is to be interpreted broadly to ensure the tenants of affordable housing units are afforded the protections intended by this Section. 460.01 Definitions The following definitions apply in this Section 460 of the Code. Subd. 1. Affordable Housing Building: A multi-family rental housing building having three or more housing units, where at least 15 percent (15%) of the units rent for an amount that is affordable to households at or below 60 percent (60%) of area median income, as median income was most recently determined by the United States Department of Housing and Urban Development for the Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Metropolitan Statistical Area, as adjusted for household size and number of bedrooms. Subd. 2. Affordable Housing Unit: A rental unit in an affordable housing building that rents for an amount that is affordable to households at or below 60 percent (60%) of area median income, as median income was most recently determined by the United States Department of Housing and Urban Development for the Minneapolis-St. Paul-Bloomington, Minnesota- Wisconsin Metropolitan Statistical Area, as adjusted for household size and number of bedrooms. Subd. 3. Cause: The tenant or a member of the tenant’s household materially violated a term of the lease or rental agreement, or violated an applicable federal, state, or local law or regulation. Subd. 4. Relocation Assistance: A payment in the amount equal to three months of the current monthly contract rent. Subd. 5. Tenant Protection Period: The period that commences on the date when a real estate closing transfers ownership of an affordable housing building and ends on the last day of the third calendar month following the date in which written notice of the transfer is sent to each affordable housing unit tenant pursuant to subsection 460.02. Subd. 6. Transfer of Ownership: Any conveyance of title to an affordable housing building resulting in a transfer of control of the building, effective as of the earlier of the date of delivery of the instrument of conveyance or the date the new owner takes possession. 460.02 Notice Subd. 1. Within thirty (30) days after the transfer of ownership of an affordable housing building, the new owner shall give written notice to each affordable housing unit tenant of the building that the property is under new ownership. The notice must include the following information: 1. The name, mailing address, and telephone number of the new owner. 2. The following statement: “Hopkins City Code Section 460 provides for a tenant protection period for affordable housing unit tenants after an affordable housing building is transferred to a new owner. Under Section 460, affordable housing unit tenants may be entitled to relocation assistance from the new owner if, during the tenant protection period, the new owner: a. Terminates or does not renew the tenant’s rental agreement without cause; b. Raises the rent and the tenant submits a written notice of termination of their rental agreement; or, c. Requires existing affordable housing unit tenants to comply with existing or modified residency screening criteria and the owner or tenant terminates or does not renew the tenant’s rental agreement.” 3. Whether there will be any rent increase within the tenant protection period, the amount of the rent increase, and the date the rent increase will take effect. 4. Whether the new owner will require existing affordable housing unit tenants to comply with existing or modified residency screening criteria during the tenant protection period, and if so, a copy of the screening criteria. 5. Whether the new owner will terminate or not renew rental agreements without cause during the tenant protection period and if so, the date the rental agreement will terminate and the amount of relocation assistance that will be provided. 6. The date the tenant protection period will expire. 7. Whether the new owner, on the day immediately following the tenant protection period, intends to: increase rent, require existing affordable housing unit tenants to be comply with existing or modified residency screening criteria, or terminate or not renew affordable housing unit rental agreements without cause. 8. Each notice required by this subsection shall contain an advisory that reads as follows: “This is important information about your housing. If you do not understand it, have someone translate it for you now, or request a translation from your landlord.” This advisory must be stated in the notice in the following languages: Spanish, Somali, and Hindi. Upon request by a tenant, the owner must provide a written translation of the notice in the tenant’s native language. Subd. 2. The new owner shall provide a copy of the notice required by this subsection to the City at the same time notice is provided to the tenant or tenants. The new owner of an affordable housing building shall not terminate or not renew a tenant’s rental agreement without cause, raise rent, or require existing affordable housing unit tenants to comply with existing or modified residency screening criteria without giving the notice required by this subsection. 460.03 Relocation Assistance Subd. 1. When required: A new owner of an affordable housing building must pay relocation assistance to affordable housing unit tenants when, during the tenant protection period, the new owner: 1. Terminates or does not renew the tenant’s rental agreement without cause; 2. Raises the rent and the tenant submits a written notice of termination of their rental agreement; or, 3. Requires existing affordable housing unit tenants to comply with existing or modified residency screening criteria and the owner or tenant terminates or does not renew the tenant’s rental agreement. Subd. 2. When paid: The new owner must pay the relocation assistance to the tenant within thirty (30) days after receiving tenant’s written notice of termination of the rental agreement or within thirty (30) days after the owner notifies the tenant that the rental agreement will be terminated or not renewed. 460.04 Penalty Subd. 1. A violation of subsection 460.03 is an administrative offense that may be subject to an administrative citation and civil penalties as provided in City Code Section 355. Notwithstanding any provision of City Code Section 355, the penalty for a violation of subsection 460.03 shall be the sum of the applicable amount of relocation assistance plus $500. Subd. 2. A violation of subsection 460.02 is an administrative offense that may be subject to an administrative citation and civil penalties as provided in City Code Section 355. Subd. 3. A violation of this ordinance as to each dwelling unit shall constitute a separate offense. 460.05 Payment by City to Displaced Tenant Within 30 days after a person pays the penalty provided for in subsection 460.04, subd. 1 to the City, the City shall pay the applicable amount of relocation assistance to the displaced tenant of the affordable housing unit for which the violation occurred. Section 2. This ordinance shall take effect May 16, 2019. First Reading: April 16, 2019 Second Reading: May 7, 2019 Date of Publication: May 16, 2019 Date Ordinance Takes Effect: May 16, 2019 By: __________________________ Jason Gadd, Mayor ATTEST: ______________________ Amy Domeier, City Clerk Page | 1 Frequently Asked Questions - Hopkins Proposed Tenant Protection Ordinance 1. What is the Tenant Protection Ordinance? The Tenant Protection Ordinance requires a three month period following the ownership transfer of a Naturally Occurring Affordable Housing (NOAH) multi-family residential property in which the new owner is required to pay relocation benefits to tenants if the new owner increases the rent, rescreens existing residents or implements non-renewals without cause and the tenant chooses to move during this period. 2. Why is this ordinance being considered by the City of Hopkins? The proposed ordinance is in response to the City’s concern about displacement of low-income tenants residing in NOAH properties that have been sold to a new owner. The ordinance allows for a three-month period of time for residents to work with housing support resources and seek alternative housing if they are facing unaffordable rent increases, new screening criteria requirements, or a thirty day non-renewal without cause notice to vacate. The ordinance also requires the new owner of an affordable housing building to provide notice of the ordinance protections to tenants of affordable housing units within 30 days of the sale of an affordable housing building. 3. When does the ordinance apply? The ordinance applies when there is an ownership transfer of a NOAH property. 4. How do I know if my building qualifies as a NOAH property? NOAH is an abbreviation for Naturally Occurring Affordable Housing. NOAH properties are defined as buildings with three or more units where at least 15% of the units have rents affordable to households with incomes at or below 60% Area Median Income (AMI). 5. Does the ordinance apply to only the residents residing in the property’s NOAH units or to all units in the building? It applies to NOAH rental units only. 6. How will NOAH properties be identified? How will affordable rents be established? After the ordinance is adopted, the City will send a notification to multi-family property owners to report the total number of units and the number of affordable units at their property. After that initial reporting, owners will then report this information as part of the annual rental licensing process for multi-family buildings. If the rents charged for at least 15% of the units are at or below rent amounts affordable to households with incomes at 60% AMI or below, the building will be certified as a NOAH property. 7. I own and lease out condominium units. Does the ordinance apply to these units? No. It applies to NOAH multi-family apartment buildings. Page | 2 8. What is my responsibility as an owner? It is the responsibility of the owner to identify their property as a NOAH property to the City. If you sell your property, you will need to make sure that the potential buyers are aware of the ordinance either directly or through their broker. 9. What is the responsibility of the buyer of a NOAH property? If the property meets the definition of a NOAH property, the new owner will be required to comply with the requirements of the Tenant Protection Ordinance. 10. Who needs to be notified? For properties in which the ownership is transferring and the property meets the definition of a NOAH property, the new owner must comply with the requirements of the Tenant Protection Ordinance including notification to all tenants residing in NOAH units. 11. What are the 60% Area Median Income (AMI) rent limits? The rent levels are calculated annually by the U.S. Department of Housing and Urban Development (HUD) for the Minneapolis-St. Paul region. The affordable rent limits at 60% AMI as of April 2018 are shown below. These rent limits will be adjusted after HUD releases the information for 2019. Affordable rents at 60% AMI (effective April 2018) Number of bedrooms Rent Studio $ 991 1 bedroom $ 1,062 2 bedroom $ 1,273 3 bedroom $ 1,471 4 bedroom $ 1,640 12. Can a new owner raise rents, facilitate non-renewals without cause or re-screen existing residents during the three month protection period following the transfer in ownership? Yes, this ordinance does not prohibit a new owner from taking the actions listed above; however, the owner would be required to pay resident relocation benefits if they do take any of those actions during the 3 month tenant protection period following the transfer in ownership and the tenant chooses to move. 13. When does the new owner have to provide relocation benefits? A new owner is required to pay relocation benefits to tenants if the rent is increased, existing residents are rescreened or non-renewals are implemented without cause and the tenant chooses to move during the three month tenant protection period. Relocation benefits must be paid within 30 days of the notification of the lease termination. 14. Are there any restrictions after the three month tenant protection period expires? No, new owners can manage the property in accordance with their management practices and the tenant lease. Page | 3 15. Are there income restrictions that apply to the households residing in the NOAH units? No, the NOAH designation is based on the rent amount charged regardless of the tenant’s income. 16. If a lease expires during the three month protection period, can a new owner raise the rent? A new owner can renew the lease but any rent increases must be effective following the expiration of the three month tenant protection period has expired or the provisions of the Tenant Protection Ordinance will apply. 17. Does the City imposed penalty of $500 per unit for failure to comply with the Tenant Protection Ordinance apply to all the units in a building or only those units that qualify as a NOAH rental units? The penalty only applies to NOAH rental units. 18. Does the ordinance apply if the management changes in the building? No, the ordinance only applies if the ownership of the property transfers.