Coralville Board of Adjustment

City of Coralville Board of Adjustment Meeting August 20, 2013 Staff: City Attorney Kevin Olson & Jim Kessler, Building & Zoning Official Dee Marshek, Administrative Assistant Item #1: Meeting called to order 6:00 PM Item #2: Member present: Szczech, Rice, Nicola and Boucher. Absent: Wells Others present: City Clerk Thor Johnson, Officer Shane Chandler, Building Official Jim Kessler, Attorney Dennis Mathahs, Joan & Mike Moreno. Item #3: Approval of July 15, 2013 Minutes. Motion to approve by: Boucher 2nd by: Nicola Motion carried: 4-0 Item #4: Public Hearing request by is for Appeal of the Building and Zoning Officials decision that Alan Saba/Dynamic Graphics/Capri Motor Lodge are in violation of the Code of Ordinance, Section 145.04-Failure to have Certificate of Structure Compliance and Section 165.28-C-2 General Commercial District. This property is located at 705 2nd Street in Coralville. Public Hearing Opened: City Attorney Olson explains this meeting as Mike & Joan Moreno’s decision to appeal Kessler’s ruling or the City’s interpretation of the Codes. The Board of Adjustment is the governing power to hear Appeals. Olson states we have 2 violations here: 1) Operating a rental property in the wrong zoning district. 2) Operating a rental without a valid rental permit. Attorney Dennis Mathahs from Marengo, Iowa represents Joan & Mike Moreno operators of Capri Motor Lodge, now under a new name J & M Motor Lodge. Mathahs explains the Moreno’s are operating a hotel/motel. The reason the City may believe it is not a hotel is because Morenos do not possess a sales tax permit. Not paying sales tax for some time may have made people think it was not a hotel/motel. 1 There’s a provision in the Iowa Administrative Code, Amended Rule 701-241.5 (1) addressing requirements to pay hotel/motel tax. To lodge furnished to a person if that person contracts to rent any rooms or facility for more than 31 consecutive days. The renter must contract to rent for a single period of 31 days or more. The renter may not accumulate these 31 days by contracting for two or more rental transactions. The incremental manner in which customers are billed by the hotel, motel inn, public lodging house, rooming or tourist court, or any place where sleeping accommodations are furnished to transient guest does not influence the accumulation of days that is required to claim the exemption. Mathahs states that he also spoke to the people that deal with the sales tax and they said as long as a renter signs an agreement to rent for at least 31 days or more of inception of rental period, no sales tax is required. Not only for the 31 days, but for the entire time the renter stays at the premise. There wasn’t anything funny about the Capri Motor Lodge not paying sales tax. Mathahs shows the Board Members the hotel /motel license, which goes back for several years. Also, signed contract (one not signed) by the tenants at the inception of lease and because it shows they are committing 31 days or more they should not be required to pay sales tax. This is why they let the sales tax permit lapses, and why they were not collecting sales tax. Mathahs states that after the 31 days, renters often stay longer. If so, it’s for a period of 1week, 2 week, or a month. No one has an agreement to stay for more than 31 days. No one has a lease to stay for an extended period of time. It’s no different than what the Iowa Lodge is doing. He adds the City’s concern for drug activity, and says he has checked with his clients and it’s his understanding there have not been any, drug arrests. Also, no tenants have been arrested for probation or parole violations. There has been one drug possession a few years ago, that ended in a deferred judgment. The Moreno’s understand the serious ramifications if any illegal activity were to happen at their property. Attorney Mathahs isn’t sure why the City feels the Capri Motor is in violation. The thing that Mr. Kessler said that the Capri needed, they would only need to have if they were having long term leases or were a rental property. This is a situation where no one has a lease or contract for more than 31 days. They have an up to date hotel/motel licenses that were in place for years. Mathahs admits there was a lapses in time when the Capri didn’t have their sales tax permit, but that’s because they weren’t required to pay sales tax, pursuant to the Administrative rule previously mentioned. 2 They didn’t violate anything; they have always had the right permits from inspections and appeals for the type of business that they are running. We respectively request the right to continue to do so. Attorney Mathahs presents one more thing for the Board to review. To prove that it’s done the right when it’s required, another property contiguous (705½ 2nd St) to this property that is leased out and it does have the certificate of compliance from the City as required for that type of dwelling. It’s not that they are unaware of the requirements when it’s necessary. Members discuss meeting procedures. City Attorney Olson introduces that Thor Johnson, as the City Clerk he is the only person by law that can check with the Department of Revenue on whether a business is paying hotel /motel tax. Thor Johnson states he called the Department of Revenue to ask about the Capri Motor Lodge’s hotel /motel registration for sales tax. He was told they hadn’t had an active registration for about two years. Attorney Mathahs does admit that there was a period of time when the Capri did not have an active sales tax permit. Szczech asks Attorney Mathahs to again explain why they didn’t have the sales tax permit. Attorney Mathahs repeats reading part of, Amended Rule 701-241.5 (1). He again states that everyone at the Lodge has signed one of the agreements. All tenants stay for at least 31 days, therefore the Capri is not required to collect any sales tax. Again stating that it is all OK according to the Administrative Rule 701-241.5 (1). Nicola questions Mathahs about anyone every contracted for less than 31 days. Attorney Mathahs No, not initially. He adds that they don’t have to stay the 31 days, they have to contract for the 31 days. Every single person has to sign an agreement when they first move in, stating they will stay for 31 days. They have to pay the 31 days, but they can leave whenever they want, this is not a lease. After the 31 days are up, they can then sign an agreement for just a week, 2 weeks or a month. Boucher Do they ever stay for more than a month after the initial one? 3 Attorney Mathahs Oh yes, some have stayed for more than a year. Rice So they can sign for a consecutive 31 day agreements. Attorney Mathahs Yes, even a week agreement or a 2 week agreement. Boucher Where does it state that you can start signing contiguous contracts that are less than 31 days for an indefinite period of time, without collecting sales tax? Attorney Mathahs That’s the incremental manner comes in to play. You have to have a contract for the first 31 day, but not thereafter. Typically they do. City Attorney Olson introduces Officer Shane Chandler, who is here to testify as to what he knows about this property, activity at this location and the length of time that some of these tenants have stayed. Officer Shane Chandler addresses the Member of the Board, stating that he could elaborate many occurrences at the Capri Motor Lodge, but will speak tonight of only four tenants with recent criminal activity. 1) Pete Solas (# 20) night manager, living there since at least 2011. Solas was arrested and on probation, just came off probation 5 days ago. 2) Christina Applegate (#2) is living there now. Between October 2012 and April of 2013 Officers have been called there 9 times. 3) Williams Muldrow (#6) Officers called 8 times between May 2011 and June 2013. 4) Anthony Ellis (#11) He’s moved, but was under investigation for nearly a year. Here 4 examples that just I have personal contact with, I know of multiple others. Attorney Mathahs You’re not stating Applegate was doing criminal activity; just that she was there a long time? Officer Shane Chandler,Yes Attorney Mathahs How long has Solas lived there? Mike Moreno adds, he still lives there; he’s been the night manager since 2008. If you look at the signed documents, some of the people have lived there since 2004. 4 Attorney Mathahs We don’t dispute that people have lived there a long time. Nowhere in the Administive rules does it say they can’t live there. We know we can’t have leases, but you can accumulate a month over and over again, and not be in violation of these provisions. I don’t dispute a word the Officer has said. It true, but it doesn’t violate any rules. Officer Shane Chandler How about the 4 people I just mentioned, 2 were medical calls the other 2 were for criminal activity. Attorney Mathahs Not surprised out of transient would have that kind of problem. Officer Shane Chandler Not a transient, this is Mr. Salos. Tenants, criminal activity, police surveillances, and knowledge of criminal activity were discussed. City Attorney Olson reads definition from Hotel/Motel tax, lodging means a rooms, apartments, sleeping quarters, hotel, motel, public lodging, rooming house or manufactured mobile home , which is a tangible personal property or a tourist court or in any place where sleeping accommodations are furnished to transient guests for rent. The question is and the City’s position is: 1) People living in long stay hotels for 9-10 years, and at what point do these become a rental property? The Morenos had sales tax permit up to 2010 and stopped paying it. 2) Four FED cases were filed by the Marenos to evict people from their property. FED actions are used for apartment complexes to evict tenants from your property. They are using landlord/tenant laws to evict people from their own property under Chapter 648 & 562 A. City Attorney Olson: Presents district court case files from Johnson County showing choices of weekly, bi-weekly, or monthly that were filed with FED actions with the court. This was filed with the court for their lease. You can’t have it both ways. The City’s arguments, they claim they are a long term extended stay by having people staying for 8-10 years. This is not a motel, this is a rental property. The problem with a rental property, they don’t meet the rental code and they’re not zoned correctly. The property is located are in a C-2 zoning district, residential rentals are not allowed. City’s interpretation is that the Moreno’s have changed uses, from long term hotel, to rental units, and it’s a violation of City code. The definition of lodging is for transient guest, not people living there long term. The City’s position is that they are running a rental property, and in doing so are in violation of Chapter 145, not having a rental 5 permit. By filing these FED actions to evict a tenant at 705 2nd Street (not including 705 ½ , which the City agrees is an apartment). Section 137C.25 of the Code states, owner operator of a hotel may eject a person from a hotel for non-payment. Instead of just calling the police and having the person removed from the room. They instead went through the six week process to evict a tenant. By their actions, they are admitting it’s a rental property by using the eviction proceedings. Signing or circling the option on these agreements ( SCSC ) admits they should be paying hotel/motel tax. City Attorney Olson repeats the City’s position. Boucher Asks for the legal description of a rental property. City Attorney Olson reads the Landlord/tenant law 562A & Chapter 423 hotel/motel tax. Boucher Where’s the legal line drawn between a hotel contract and a rental agreement. City Attorney Olson There isn’t a clear cut line. The City is saying the definition for lodging in hotel is for transient guests. Transient guests are not 8 to 10 years tenants. Szczech How long does the City think tenants should stay? City Attorney Olson I’d say if a person has been staying there for over a year, and are not using it for legitimate reasons. We have people using this as their legal residence for driver’s license purposes. Boucher Questions if there are any other relevant case laws for this. City Attorney Olson Not that I could find. Board Members continue to discuss and try to understand a legitimate length of time. Rice Questions other extended stays places. Kessler We have several other extended stay hotels. City Attorney Olson Extended stay hotel are utilized for lengthy hospital stays or working away from home, but not for 8-10 years. Nicola If you go out and rent an apartment, you don’t pay sales tax. So if they are a rental, then they should be an apartment, otherwise they’re in violation. 6 Attorney Mathahs Looks to me like the City Attorney is asking you to draw a line where the people in Des Moines have not. Mathahs thinks if the Administrative agencies wanted there to be a time limit, a legislative rule/law would have been written. He states, it’s not supported by any law that’s why there are not any cases. Boucher When do eviction rules come in to play? Mike Moreno The reason we filed out that paperwork was because we did call the police to remove people from the property. We were told that if tenants lived there more than two week, we had to legally evict them. Both Attorneys continue to debate evictions, landlord /tenant rules, 137C.25, 562A, hotel/motel tax, 31 day rule/Rule 701-241.5 (1) , improper zoning, rental permits and the rental inspection process. Boucher I’m trying to find an arbitrary way to define the line with the eviction law, to help define a line between hotel and a rental unit. City Attorney Olson We do not have to define the line; 8-10 year stay is not a hotel. It’s the Boards discussion, on where to draw the line. We’re not saying that they’ve violated the hotel /motel tax, it’s just a portion of this case. It shows that they are not acting as a hotel. Olson states Mathahs is correct, there isn’t a law, but that refers to the hotel/motel tax. What the City is saying is that they are in violation of the Coralville zoning code and rental code. Boucher What’s the difference between rental and a hotel property? Kessler hands out rental permit document. Attorney Mathahs and City Attorney Olson both agree it all comes down to, rental versus hotel property. Attorney Mathahs doesn’t believe that it should be the Board decision to make this judgement, the people that make the laws are in Des Moines, Iowa. City Attorney Olson again reads the definition of lodging. Meaning rooms, apartments, sleeping quarters, hotel, motel, public lodging, rooming house or manufactured mobile home , which is a tangible personal property or a tourist court or in any place where sleeping accommodations are furnished to transient guests for rent. 7 Is a transient guest there for 10 years? Boucher What’s the percentage of your tenants are there for extended period of time? Members reference the agreements provided by Moreno to make this calculation based on the 17 units at Capri Motel Lodge. Attorney Mathahs, City Attorney Olson and Members again discuss the hotel/motel tax permit issue. Boucher The tax permit is not an issue here; it’s evidentiary to whether it’s a hotel? City Attorney Olson Correct. Rental permit requirements and inspections are discussed. Mike Moreno I have a rental permit for the property at 705 ½ 2nd Street, and a permit from the Health Department for the hotel. Transient quest are again discussed. Kessler questions the number of rooms and the number of contracts. He adds, if someone comes to town to rent a room, there’s no hotel rooms available because of the long term tenants. How do you offer this as a hotel if you don’t have rooms available? Boucher Do you offer anything less than 31 days? Mike Moreno Yes, we offer a day if we have an opening. City Attorney Olson Then you’ve just admitted that you’ve violated the hotel/motel tax law. Kessler What we’re saying is that you’re aiming for the long term steady tenants, rather than making yourself available as a hotel. Mike Moreno No, we’re trying to be like the other extended stay hotels. Rice What this comes to; is it a hotel or is it a rental property and the State code or Administrative law doesn’t give us any guidance. 8 Members continue to discuss sales tax, eviction laws, leases, charging rent versus charging a fee, and other extended stay hotels. Szczech It comes down to this, is it rental units or is it a hotel. With all this discussion we can conclude that the law isn’t clear; but I believe these are rental units, not a hotel. Members continue discussing the relevance of not having the sales tax permit, or just obtaining the permit, failure to have a Certificate of Structure Compliance if determined to be a rental, and the possibly of being in violation of the Zoning Code. Attorney Mathahs If we’re a hotel/motel, we don’t have to follow either of those provisions, because we’re inspected by the county. Rice I understand why this request is before us. We have to make a decision, which is very different from the normal decision that we usually make. We are being asked to interrupt a very vague State Code and determine whether the folks that live there are renters or guests. City Attorney Olson Here’s the decision, if you determine that this is a rental property, they’re in violation of the Zoning Code because they are in a C-2 district and would need to be in an R-4 district. If you determine they’re a hotel, they’re in the right C-2 zoning district and they wouldn’t need the 145.04 permit, and this Appeal would be done. Rice expresses the difficulty in making this unusual decision, determining renter versus guest. Boucher The unusual part is the percentage of long term tenants, it would have been easier if you wouldn’t have just obtain that permit to rent for one night, that would have been a definite determining factor for me. Rice I don’t feel I know enough about the Codes tonight to be making the right decision. But we have to make a ruling. City Attorney Olson You could adjourn and defer this for 30 days, but you can’t discuss this among one another. The ultimate decision has to be based on the evidence that was presented to you tonight. Nicola states that she agrees with Szczech because of the signed contracts, tenants using the Motor Lodge as their address and the FED actions filed. It seems to be a rental property. 9  Boucher I view this as a rental or if you asked me this on the street I’d say it’s a rental. But according to the letter of the law, there’s a very ambiguous interruption and I’m not sure that I’m ready to draw that line and make the statement that it is a rental. I feel there’s too much ambiguity with this Appeal. Public Hearing Closed: a) Consider action on this Appeal Rice and City Attorney Olson clarify the voting process for the members. Motion to vote on affirming Mr. Kessler’s decision that J& M Motel Lodge is in violation of City Code by: Nicola Motion 2nd by: Boucher Rice Let’s be totally clear here, a yes vote means you are supporting the City’s position that these are rental units. A No vote means you over turn Mr. Kessler decision. It would take 3 votes to overrule the City’s position. Roll call Vote: Nicola - aye Boucher – nay Rice – nay Szczech – aye 2-nays / 2-ayes Motion carried to affirm City’s decision. Item #5: Motion to Adjourn Motion by: Szczech 2nd by: Nicola Motion Carried: 4-0 Meeting Adjourned 7:09 PM Respectfully submitted, Dee Marshek 10