Iowa City Council passes moratorium on some rental and building permits

File photo

New rental and building permits for some areas of Iowa City will be put on hold following the passage of a six-and-a-half-month moratorium during a special meeting Thursday morning. The move comes in response to state legislation that eliminates local governments’ ability to place occupancy limits on the number of non-family members in rental units.

A report prepared by City Attorney Eleanor Dilkes cited concerns that the removal of occupancy limits would cause disruptions to the community, including the potential to affect housing affordability and neighborhood stability, put public and tenant safety at risk and increase demands on law enforcement, infrastructure and municipal services.

“We are losing our most effective regulatory tool that ensures we have stable neighborhoods,” City Manager Geoff Fruin said at a city council work session Tuesday, June 6. “We are asking for a moratorium to study this issue more and fully flesh out the ideas we have to combat this.”

The moratorium will put on hold the approval of new rental or building permits until the end of the year. The moratorium — which does not apply to multi-family properties, like apartment buildings, or pending rental permit renewal applications — covers a vast swath of Iowa City bounded by the Iowa River on the west, I-80 on the north, Scott Boulevard to the east and Highway 1/Highway 6 to the south.

“There is some emergency to the manner,” Fruin said. “Renters are already trying to enlarge properties.”

Typically the city receives around five applications to alter rental properties in a year. However, since the bill was passed in April, the city has received 40 applications for 35 properties, mostly single-family or duplex units located near the downtown, according to the city council report.

Following the end of the moratorium period, the city will propose a finalized set of regulations. The new legislation takes effect Jan. 1, 2018.

Daniel Hoffman-Zinnel, the executive director of One Iowa, Iowa’s largest LGBTQ rights organization, put out a statement in support of the legislation, saying that, “allowing municipalities to define ‘family’ and use that definition to determine who can and can’t rent a home opens the door to discrimination against LGBTQ families.”

Although the newly passed bill, House File 134, eliminates restrictions based on familial relationships, cities are still able to regulate the height and size of buildings and yards, the location of buildings and population density for the purpose of preserving historically significant neighborhoods in communities across Iowa.

At Tuesday’s city council meeting, Prestige Properties owner Mike Oliveira — who noted that he pays over half a million dollars in property taxes and employs over 100 people in Iowa City — said he fears this moratorium will impose several challenges for his rental business.

“This is not a simple, easy issue,” Oliveira said.

A letter from Oliveira’s attorney, R. Michael Hayes, proposed that the city council is moving too fast and suggested that the end of the moratorium period should be Oct. 18, 2017, with the city adopting any new regulations by that date so that they can be incorporated into new leases effective Jan. 1, 2018.

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Fruin presented ideas for regulations that he said would support the market for both renting and buying homes and prohibit investments that detract from each neighborhood’s character. Among the suggestions were heightening enforcement of regulations in neighborhoods by increasing inspector staff and having more police enforcement via drive bys rather than call-response action.

Other ideas included increasing the responsibility of landlords, requiring them to be on-call 24/7. Council Member Susan Mims said she thinks that it would be fine to make landlords more responsible for the properties from which they are profiting.

Oliveira said he found Fruin’s presentation both enlightening and concerning.

“Some suggestions seem punitive in nature,” he said.

Oliveira encouraged the council to communicate with local landlords in considering new regulations.

“We are going to ensure that we, our investment in the community and our rental properties are not going to be in a situation where zoning or adverse city regulations impact our business,” Oliveira said.

“I think the city council needs to step back here before they rush into this,” he added.

At the Tuesday council meeting, council members raised concerns about the impact housing developments have had in the community and the need to focus on preserving historic neighborhoods. A number of council members brought up the example of the neighborhood south of Burlington Street between Gilbert and Van Buren, where many historic homes were destroyed throughout the 1950s and 1980s and replaced with large-scale apartment buildings dominated by students.

“This is not meant to demonize students,” Mayor Jim Throgmorton said. “It’s about the balance of rental versus home units and the market incentives that are being created by this new legislation that would tip the balance dramatically to rental units.”

However, Council Member Kingsley Botchway said the legislation could make some housing more affordable for students and hoped that any action taken wouldn’t negatively impact the racial and socioeconomic diversity of Iowa City’s neighborhoods.

Mims said employing the moratorium is “absolutely critical for the next few months. If we don’t, we’ll have changes made that we can’t undo that would critically damage neighborhoods.”