IOWA CITY — Landlords hoping to receive a building permit to expand their properties or receive a new rental permit in certain residential zones of Iowa City may be out of luck for the rest of the year.
On Tuesday evening, the Iowa City Council approved, 7-0, the first reading of a roughly six-month moratorium on the issuance of new rental permits and building permits, which could allow the enlargement of rental properties within certain residential zones in a major portion of Iowa City.
The council also scheduled a special formal session at 8 a.m. Thursday to vote again on the moratorium.
The action is in response to a new state law, which does not allow cities to regulate occupancy based on familial status. Previously, Iowa City allowed only three non-related people to live in a dwelling together.
“ ... The issue is it’s been a primary tool in maintaining the stability of our neighborhoods and ... we need some time to figure out how we’re going to replace that tool or restructure things so that we can continue to maintain the stability of our neighborhoods,” said City Attorney Eleanor Dilkes.
Since House File 134 was signed into law, the city has received about 40 applications for building permits to add bedrooms to rental structures, according to the moratorium. Additionally, it stated in recent history, the city received fewer than five per year.
The city argues that a moratorium would allow staff to study the impact of the new law and its loss of its occupancy regulation method because “overoccupancy of rental units is an issue that negatively impacts the quality and value of neighborhoods,” according to the ordinance.
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The law “tips the market very heavily in the favor of rentals and the stability of the neighborhood starts to fall apart and become one sided,” said City Manager Geoff Fruin. “Balanced neighborhoods support a diverse economy and a healthy downtown.”
If passed, the moratorium would affect rental units in low- and medium-density single family zones as well as Neighborhood Stabilization Residential Zones within the borders of “Scott Boulevard on the east, I-80 on the north, the Iowa River and Mormon Trek Boulevard on the west, and Highways 1/6 on the south,” according to the ordinance.
“This would give us the breathing space that we need so we can make a thoughtful, lawful solution to this significant change in our regulatory mechanism,” said council member Rockne Cole.
It would not affect multifamily properties, such as larger apartment buildings, or pending rental permit renewal applications.
Mike Oliveira, owner of Prestige Properties LLC, spoke out against the moratorium. His legal firm, Belin McCormick, wrote to the council about the issue on behalf of Prestige Properties, which owns and may plan to purchase more rental housing as well as single-family homes it intends to turn into rental housing, according to the letter.
The letter questioned the legality of the moratorium — if it should first go before the Planning and Zoning Commission or require a public hearing — as well as requesting the moratorium end Oct. 31 instead to allow landlords and tenants “knowledgeably can enter new leases on any vacant space” beginning Jan. 1.
During a presentation on neighborhood stability in a work session earlier Tuesday, Fruin outlined seven areas focus staff could look at to regulate occupancy. Among these strategies were limiting rental permits or occupancy level in a certain neighborhood and tougher enforcement of city code for things like nuisances properties or examining city housing programs.
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