2014/04/23 Council Agenda Packet

In addition to the difficulties associated with financing and refinancing of condominiums, having a fee- simple unit lot subdivision ordinance in place provides a variety of benefits, including: • Fee-simple units do not carry the same litigation risks as condominium units; • Fee-simple development does not trigger the additional and protracted insurance requirements associated with condominiums defect litigation; • Buyers prefer fee-simple ownership; • Fee-simple units encourage the natural progression of buyers from apartments to townhomes, where equity can be built and eventually leveraged toward the purchase of single-family residences in established neighborhoods; • Fee-simple townhomes provide viable alternatives for the entry level buyer to obtain home ownership; and • Fee-simple townhomes create opportunities for workforce housing. We understand that one of your main concerns is the ongoing maintenance of the private infrastructure in fee-simple developments. In the proposed Code Amendments before you,ongoing maintenance is addressed in Section 15A.100-Covenants and Maintenance.This section requires final covenants to be satisfactory to the City Attorney,and recorded with the County Auditor's office.The ongoing maintenance of common areas and infrastructure will be the responsibility of the homeowners' association (HOA), similar to a condominium association. The HOA is responsible for maintaining, repairing and replacing the common areas and private infrastructure.The common areas may include the exterior of the buildings, parking lots,sidewalks, green space not included within the lots, playgrounds,swimming pool, other recreation facilities,and private roads.The owners will be responsible for maintaining, repairing, and replacing their lots, including the landscaping within their property boundaries and the interior of the owners' homes. It's important to point out that there is no new risk involved for the City with fee-simple ownership. In fact,with the adoption of this measure,the City is better protected by having the ability to review and approve the covenants,conditions, and restrictions(CC&R's)as written into the code amendments. The City would be able to add verbiage regarding parking restrictions and maintenance of no parking signs and lanes,and consequences for those who do not comply.Also,the City would have information on the board members and any management company(it could be a requirement that the City get this updated information each year)so they have the appropriate contact. The dissolution of a HOA is highly unlikely given RCW 64.38,which governs the HOA and requires two- thirds of the voting members to approve dissolution. In addition,the RCW also permits the governing documents to alter this default rule to potentially require 100 percent of the voting members and 100 percent of the lenders to dissolve (see attachment A). In the unlikely event of the dissolution of a HOA and the inability of the homeowners themselves to maintain the private sewer systems, the City may further require a drainage easement and maintenance covenant be recorded that would allow the City to assume maintenance and bill the individual homeowners(see attachment B).Similar covenants may also be required to maintain the private drives as well.