City Council Meeting May 7, 2018

1. Proposed Amendments to Chapter 14.16 “Inspection Ordinance” Related To The Occupancy Inspection Program City Council MeetingMay 7, 2018

2. Amendment to Inspection Ordinance • Executive Summary • Inspection Ordinance (i.e. Occupancy Inspection Program) was adopted in 1973 and last revised in 1991 • Staff reassessed the Occupancy Inspection Program (OIP) and considered the following four alternatives: • Streamline OIP to refocus on life and safety violations • Discontinue OIP, in lieu require seller to obtain and disclose a property records report • Discontinue OIP • Retain OIP without changes

3. Amendment to Inspection Ordinance • Executive Summary • Staff recommends to streamline program and refocus on life and safety violations • Inspection criterion limited to unpermitted additions/conversions utilized as habitable space and unpermitted electrical panel replacements/upgrades • Allowing self-certification for minor code violations • Exempting condominium/townhouse units from required inspections

4. Amendment to Inspection Ordinance • Background • Point of sale requirements for other cities in L.A. County • Approximately 16 of 88 cities in Los Angeles County require a point-of-sale inspection • Scope of inspections varies between cities • Drive-by inspection of exterior (Hermosa Beach) • Walkthrough of exterior (Azusa, Cudahy, Huntington Park, Inglewood) • Exterior and interior of non-residential structures (Bell, Carson, El Monte, Hawaiian Gardens, Lynwood, South Gate) • Exterior and interior of all structures (San Fernando, Compton, Maywood, San Marino, Pasadena)

5. Amendment to Inspection Ordinance • Background • Pre-sale requirements for comparable cities

6. Amendment to Inspection Ordinance • Background • History of the Occupancy Inspection Program • 1950s first formal program to include mandatory inspections with the purpose of protecting occupants and improving housing stock • 1973 - Occupancy Inspection Phase I included single family and duplex units • 1974 -Occupancy Inspection Phase II included multi-family units • 1986 - Occupancy Inspection was bifurcated into mandatory point-of-sale inspections for single family and duplex units (i.e. OIP); and mandatory inspections every four years for multi-family units (i.e. Quadrennials) • 1991 - Occupancy Inspection Program was revised to allow for self-certification of minor violations

7. Amendment to Inspection Ordinance • Background • Overview of Current OIP Program • Code Compliance Division consists of a Property Maintenance/Zoning Enforcement Section and Housing Section • Housing Section administers the OIP (1,800 cases per year) and Quadrennial (5,500 rental units per year) programs • Properties are inspected for Major and Minor violations • Major violations require re-inspection to verify correction of violation • Minor violations do not require re-inspection, however, property owner can self-certify corrections were completed • Seller and buyer have option of deferring correction of Major violations via a Transfer or Responsibility, whereby the new property owner is required to correct violations within a specified time period

8. Amendment to Inspection Ordinance • Background • Overview of Current OIP Program • List of typical Major and Minor Violations:

9. Amendment to Inspection Ordinance • Background • Evolution of Code Compliance and Home Inspections

10. Amendment to Inspection Ordinance • Background • Criticism of the OIP • OIP redundant as in-depth private home inspections already take place • Substandard properties are typically improved prior to sale or shortly thereafter • Lack of consistency in inspections, whereby pre-existing violations were not identified during previous sale but have been identified at resale • OIP requirements delay escrow and jeopardize sales agreements • California State Audit • OIP audited in 2016 as part of larger audit that included 2 other cities • Intent was to assess administration of the program in conformance with adopted ordinance and approved rules and regulations • Various deficiencies identified, most notably consistency and lack of follow-through

11. Amendment to Inspection Ordinance • Background • Cities response to deficiencies • Utilization of specialized Code Officers dedicated to the OIP • Utilization of itemized checklist during inspections; also available to public • Implementation of an online portal that allows scheduling and payment of OIP inspections • Utilization of supplemental contract resources to assist with back-log of OIP cases • Utilization of mobile inspection software that allows for an expedited report • Continuous training on identification and abatement of Housing Code violations

12. Amendment to Inspection Ordinance • Analysis • 348 OIP cases were received between Jan. – Mar. 2018 • 21 of the 97 cases with major violations included one or more unpermitted additions/conversions being utilized as habitable space • Remaining 76 of 97 cases with major violations were largely limited to unpermitted HVACs, water heaters, windows and inadequate fire separation (i.e. self-closing door between habitable space and attached garage)

13. Amendment to Inspection Ordinance • Analysis • Condominiums and townhouses are significantly less likely to have Major and Minor Violations • Major Violations limited to unpermitted HVACs and water heaters

14. Amendment to Inspection Ordinance • Analysis • Option A: Streamline OIP to life/safety violations • Quality of housing stock has significantly improved • Other programs in place to address code violations • OIP allows Code Compliance to enter property and conduct a thorough inspection • Approximately 100 properties per year are identified with illegal additions/conversions utilized as habitable space • Exempt Condominiums and townhouses from required inspections (only self-certification required) • Unreported illegal construction results in undervalued property appraisals and reduced property tax revenues

15. Amendment to Inspection Ordinance • Analysis • Option A: Streamline OIP to life/safety violations • Major Violations requiring re-inspection • Illegal addition, alteration, conversion utilized as a habitable space • Unpermitted electrical panel replacement/upgrade • Minor violations requiring self-certification • Other minor electrical deficiencies • Unpermitted mechanical equipment • Missing or improper fire detection • Required gas shut-off

16. Amendment to Inspection Ordinance • Analysis • Option B: Discontinue OIP, require seller to obtain and disclose a property records report prior to sale or transfer of the property • Property records report would include the following: • Street address and legal description • Zoning classification • Occupancy as indicated and established by permits record • Permit history • Code Compliance case history (including previous OIPs) • Land use permits • Any deed restrictions

17. Amendment to Inspection Ordinance • Analysis • Option C – Discontinue OIP • Utilize existing and new resources to identify and enforce code violations • Redirect staff resources to a more robust Quadrennial program • Option D – Retain OIP and continue as is • Increase of fees are required to adequately administer the program • Rigorous inspections are duplicative of already utilized private home inspections

18. Amendment to Inspection Ordinance • Next Steps • If Council agrees to streamlined OIP, staff would complete the following: • Prepare revisions to the existing inspection ordinance to streamline the Occupancy Inspection Program as outlined in Option A; including authorization of the City Manager to prepare updates to the adopted Rules and Regulations which outline the administrative enforcement and implementation of the inspection program. • Return to Council for approval of any necessary fee changes to ensure cost recovery for the program. • Partner with the Pasadena Foothill Associations of Realtors and other stakeholders to update the Rules and Regulations for the OIP.

19. Amendment to Inspection Ordinance • Recommendations • Find that the proposed Pasadena Municipal Code Amendments are exempt from environmental review under Section 15061(b)(3) (general rule) of the California Environmental Quality Act (“CEQA”); and • Direct the City Attorney to prepare an ordinance within 60 days amending Pasadena Municipal Code Section 14.16 “Inspection Ordinance” and the associated “Rules and Regulations” as outlined in the staff report.

20. Proposed Amendments to Chapter 14.16 “Inspection Ordinance” Related To The Occupancy Inspection Program City Council MeetingMay 7, 2018

21. Sample Property Records Report