TIC legislation is a rent control issue

We're in the most expensive city in the country, and we can't afford another 2,000 condo conversions

|
(177)

OPINION If legislation introduced by Supervisors Scott Wiener and Mark Farrell passes the Board of Supervisors next month, up to 2,000 tenancies in common will be allowed to bypass the lottery process and convert to condominiums.

Add those to the nearly 6,000 conversions that have occurred from 2001-2011 (according to stats from the Department of Public Works), and you have a sizable chunk of rent-controlled units that will have been yanked from our housing stock in the past decade or so in a city that can't afford to lose rental units, especially those that preserve affordability while tenants live in them. TICs are still under rent control; condos lose it when they're sold.

Which makes the Wiener and Farrell legislation a rent-control issue. Not to mention a really bad idea at a really bad moment in time.

San Francisco's perennial housing crisis can't possibly get worse. Rents are the highest in the country — and still rising. The average rent in the city these days is $3,000. The vacancy rate is low.

Ellis Act evictions, a tool for creating TICs by allowing a landlord or speculator to circumvent just-cause eviction protections, are on the upswing. They're not as high as they were at the height of the dot-com boom of the late 90s, but, considering that these days many landlords and speculators threaten tenants with Ellis or buy them out rather than do the dirty deed, the number of folks displaced for TICs is higher than what is recorded at the Rent Board. Some tenants have actually received letters from new landlords with two checkboxes — one for Ellis and the other for a buyout. Take your pick, which way do you want to be tossed out and possibly left homeless?

The folks being displaced are from every district and represent the diversity about which we always brag: longterm, generally low-income seniors, disabled people, people with AIDS, families, and people of color. And they're less likely to find other apartments they can afford.

Wiener claims that buildings where there are evictions will not be eligible for conversion, but many of the TICs currently in the lottery, which will be eligible for conversion under the Wiener/Farrell legislation, were created by evictions. Almost 20 percent of the units in the pipeline were formed before legislation was put into place to restrict conversions if tenants are ousted. How many of the other 80 percent are the result of threats and buyouts, de facto evictions? Or were entered into the lottery even when they shouldn't have been?

Brian Basinger, founder of the AIDS Housing Alliance, was evicted from his apartment for a TIC, yet his place was converted to a condo, despite the fact that he's a protected tenant.

Allowing as many as 2,000 conversions not only diminishes the rent-controlled housing stock, but it also jacks up rents. Not to mention it gives speculators incentive to do more Ellis evictions or buyouts -- after all, though Wiener and Farrell say this is a one-time only deal, once Pandora's box is opened, it's going to be hard to keep it shut. I think landlords and speculators know that.

The Housing Element of the City's General Plan, adopted in 2009, instructs officials to "preserve rental units, especially rent controlled units, to meet the City's affordable housing needs."

This legislation won't preserve rent-controlled units. It's a bad fit for our city.

Tommi Avicolli Mecca, who's worked for the Housing Rights Committee for 13 years, is a longtime queer tenants right/affordable housing advocate.

Comments

The tenant would have a lifetime lease which means extra pressure to get rid of them and release the unit from ANY rent control.

Posted by Sigmarlin on Jan. 23, 2013 @ 3:39 pm

I have a question. What is this "lifetime lease"? If someone is in a rent controlled apartment built before 1979, and they pay rent and dont do anything to get themselves evicted, the landlord cant evict them without Ellis Acting them, right? So this law just gives people protection from Ellis Act- right? Calling it a lifetime lease sounds misleading...

Posted by Guest on Jan. 29, 2013 @ 3:53 pm

there are 15 just causes for eviction under the rent ordinance and only about half of them are "for cause" meaning that the tenant did something wrong.

Other types of eviction that can evict a "good" tenant include:

1)Owner wants to live there
2) Demolition or merger of the unit
3) Unit becomes condo
4) Unit is substantially rehabilitated
5) Unit becomes owned by the government, charity or non-profit
6) Ellis
7) Temporary removation (which often ends up being permanent)

Posted by anon on Jan. 29, 2013 @ 4:01 pm

Another doctor real estate exploiter? I wish I were shocked, but doctors, lawyers, dentists and other high-income groups have been exploiting real estate speculation for decades, mostly as landlords that get billion-dollar tax subsidy write-offs, but they've also been very active in the TIC/condo process too.

The families that bought your rent-controlled building are predatory economic exploiters. They all had the chance to purchase a non-rent-controlled housing unit, but figured they could make even more money destroying San Francisco affordable housing at the same time. Mayor Lee, Commissioner Antonini, and the entire SF Plannng Department thank you for destroying the affordable housing and quickening the pace of the economic cleansing of SF.

Posted by Guest on Jan. 23, 2013 @ 2:34 pm
Posted by anon on Jan. 23, 2013 @ 2:55 pm

We all understand economic bottom feeders: landlords, slave owners, warlords, TIC converters, and other people who use their military or economic might to crush others. We've read about them in the history books going back to the beginning of the first printed page.

I suppose in some sense we can say they are "successful," but let's not pretend they add anything to the community other than exploiting and taking from others for their own personal gain.

Posted by Guest on Jan. 23, 2013 @ 3:07 pm
Posted by Guest on Jan. 24, 2013 @ 6:48 am

Other comments highlight the economic means landlords use.

Execution of evictions by the sheriff is military might. In some jurisdictions, such as Virginia and Mississippi, no court order is needed.

Posted by Eddie on Jan. 24, 2013 @ 7:19 am
Posted by Guest on Jan. 24, 2013 @ 1:18 pm

a court order, just a declaration from the landlord. What about the economic might the other commenter mentioned? You seem to have ignored that part.

Posted by Eddie on Jan. 24, 2013 @ 1:55 pm

any attempt by the landlord to use the courts to instruct the sheriff to evict that tenant is using "military force"?

Really?

Posted by Guest on Jan. 24, 2013 @ 2:06 pm

the state uses force to execute evictions. That's obvious, isn't it? I am not advocating that tenants stop paying rent, except as justified to force property owners to make needed repairs.

Of course, during this present housing crisis, many tenants throughout the country continued to pay rent to the entity that used to own the property, but had lost it through foreclosure. Those unscrupulous ex-owners pocketed the rent, and the tenants got evicted for non-payment.

Posted by Eddie on Jan. 24, 2013 @ 2:25 pm

and confine rapists and murderers. I fail to see how that informs the debate about the housing crisis that rent control has imposed on this city.

Posted by Guest on Jan. 24, 2013 @ 2:38 pm

Conspiracy it is, of the corrupt and the greedy, of those who will do anything to get ahead and feel entitled while they do it. This story is nothing new, it's as old as our history, it's good versus evil. In San Francisco we have always had battles with the elite and their desire to own, develop or sell all the land and property in this city and to control those who live there and to rob them of everything they have. As long as we live in the small area called San Francisco this will be happening all around us, every day of every year. Space is limited and costly and those who can control it can make lots and lots of money by making their property more expensive, of course they will do everything in their power to achieve their ends. Just look at the Board Of Supervisors and realize who is motivated to help the people who currently reside here or who is more motivated by greed or power and will sell out a San Franciscan in order to give that tenant's space to wealthier person.

Posted by Guest on Jan. 24, 2013 @ 1:15 am

I rented a unit at Rincon Towers in 1991 and signed an agreement that the building would become a condo in 2000 and I would have first purchasing rights. The building had no rent control. I moved into a unit at $1500 a month and 18 months later was told that an interested party had looked at the floor plan of my apt. and offered $2500 to live in it. I was told that I could either match that amount or move. I matched that amount. Fortunately I am self employed and could just work more. In 2000 I was told that the agreement for the condo conversion was null and void as the building owners sold their holdings to an investment group in NYC and that for "my protection" I would be allowed only 6 month leases from that point forward. As it was not prudent to my interests to endure 6 month increases of $500 per month , I moved out when rent hit $3500 (2001) I am successful, don't equate success with property ownership, and prefer to rent.
I am a professional artist. Almost every artist I previously collaborated with in the 80's and 90's has had to leave SF because of housing costs. Fortunately I live in a rent controlled apartment at present. Perhaps you would prefer an art free, servant free, waiter free, house-cleaner free, city with just financially savy people.

Posted by Guest on Jan. 28, 2013 @ 6:36 am

Do you expect to get many things for less than the market rate for them?

If so, why? What entitles you? Why are you special?

Posted by Guest on Jan. 28, 2013 @ 9:09 am

Housing prices plummeted as the asset bubble popped, and homeowners had to make do with the crash while the Fed dropped trillions of dollars from helicopters on Wall Street banks to make sure that their serialized mortgage bonds did not get hit too hard and that the banks' balance sheets were made whole.

I don't think that anyone is asking for but a thin sliver of what government compels us to offer up to our "economic betters," stability in our lives in the face of adversity and market pressures.

Posted by marcos on Jan. 28, 2013 @ 12:02 pm

In fact, a place on my block that sold for 929K in 2007 is now back on the market for 979K.

SF isn't Las Vegas or Miami.

Posted by Guest on Jan. 28, 2013 @ 12:16 pm

Lower wage people living in distant bantustans.

Posted by Eddie on Jan. 28, 2013 @ 9:18 am

Please feel free to ignore Guest #2, as it is only a troll.

This type of troll -- unlike thoughtful, intelligent informed and well-spoken commenters such as yourself -- only seeks to derail discussion and debate; they only seek to create misery.

Posted by lillipublicans on Jan. 28, 2013 @ 9:28 am

That he moved to a more suitable home?

How is that news or instructive in any way?

Posted by Guest on Jan. 28, 2013 @ 10:46 am

Once the intent is identified, such emanations can be looked at to understand their motivation without experiencing the tiniest bit of the intended effect. This troll is a sad malignancy on this website and on the larger society whose problems are addressed here.

If the troll used snark to actually make valid points that would be one thing, but when directly confronted on facts, it *always* either demurs or slinks away to try more of its semantic pranks elsewhere. The snark *is* the point.

Posted by lillipublicans on Jan. 28, 2013 @ 11:53 am

deflect with labels and insults. Got it.

Posted by Guest on Jan. 28, 2013 @ 12:05 pm

"I rented a unit at Rincon Towers in 1991 and signed an agreement that the building would become a condo in 2000 and I would have first purchasing rights. The building had no rent control. I moved into a unit at $1500 a month and 18 months later was told that an interested party had looked at the floor plan of my apt. and offered $2500 to live in it. I was told that I could either match that amount or move. I matched that amount. Fortunately I am self employed and could just work more. In 2000 I was told that the agreement for the condo conversion was null and void as the building owners sold their holdings to an investment group in NYC and that for "my protection" I would be allowed only 6 month leases from that point forward. As it was not prudent to my interests to endure 6 month increases of $500 per month , I moved out when rent hit $3500 (2001) I am successful, don't equate success with property ownership, and prefer to rent.
I am a professional artist. Almost every artist I previously collaborated with in the 80's and 90's has had to leave SF because of housing costs. Fortunately I live in a rent controlled apartment at present. Perhaps you would prefer an art free, servant free, waiter free, house-cleaner free, city with just financially savy people."

The troll didn't really miss the story and the suggestion is more of the same patently obvious mendacity which it habitually engages in. This is the exact sort of scumbag who falsely reports comments as being in violation of the terms on SFGate in order to silence the voices it objects to. What a disgusting creature it is.

Posted by lillipublicans on Jan. 28, 2013 @ 12:27 pm

It's not just about "equating success with property ownership" - it's about creating security. It's about the potential to create value through equity; to directly invest in, and benefit from, the improvements in your neighborhood; and to create more options for you, and, if applicable, your family's future.

Posted by Guest on Jan. 28, 2013 @ 10:59 am

encourage it to the extent of hundreds of billions in tax relief for mortgage interest, capital gains tax and property tax.

Except of course in certain progressive quarters of San Francisco, where homeowners are deemed to be evil simply because they bought a home.

Posted by Guest on Jan. 28, 2013 @ 11:29 am

You are so trapped in the museum of the way things used to be. It is time for you all to modernize up and smell the coffee.

Americans are moving away from home ownership because they don't want to get burned by a popping asset bubble again.

Posted by marcos on Jan. 28, 2013 @ 11:54 am

Interesting. Are you planning to sell your condo?

Posted by Guest on Jan. 28, 2013 @ 12:07 pm
Posted by Guest on Jan. 28, 2013 @ 12:50 pm

then you really haven't lost anything.

The only people "burned" in the RE market in the last few eyars were those who took out dumb loans and didn't do their due diligence.

That's Darwinism at work.

Posted by Guest on Jan. 28, 2013 @ 12:19 pm

It's beginning to approach high comedy.

One wonders what "governments" encourage homeownership with capital gains tax; of all the taxes mentioned, only the U.S. federal government's mortage interest qualifies -- what other governments have a subsidy for home ownership?

Pathic bold lying sad silly spewer of intellectual garbage raddled sick brain guest.

Posted by lillipublicans on Jan. 28, 2013 @ 12:01 pm

California taxes capital gains as well, but not on your home.

Posted by Guest on Jan. 28, 2013 @ 12:17 pm

California taxes capital gains as well, but not on your home.

Posted by Guest on Jan. 28, 2013 @ 12:17 pm

you make a claim.

"Most countries give breaks to homeowners" -- Prove it!

As for California's exemption from capital gains up to a 1/4 million dollars, since that law replaces the previous tax law wherein capital gains were shielded from taxation *only* if a more expensive home were purchased within two years, the effect is to encourage and facilitate *getting* *out* of home ownership.

You are a habitual spewer of total crap.

Posted by lillipublicans on Jan. 28, 2013 @ 12:35 pm

I know what kind of tax breaks are typically available.

But really, are you seriously trying to deny that governments try and encourage home ownership? Really?

Why do you think Ginnae Mae was invented?

Posted by Guest on Jan. 28, 2013 @ 12:48 pm

and constantly spew lies on a website frequented by your intellectual betters.

Citation now. Prove that "most countries give tax breaks to homeowners."

Posted by lillipublicans on Jan. 28, 2013 @ 12:56 pm

Some of us actually go out there in the world, and so don't learn everything from a computer screen.

Posted by Guest on Jan. 28, 2013 @ 2:38 pm

Exactly what any interested observer would expect.

Posted by lillipublicans on Jan. 28, 2013 @ 4:19 pm

learn all kinds of things.

Posted by anonymous on Jan. 28, 2013 @ 4:49 pm

If you make a claim and fail to back it up when asked to, then resort to making grand diversionary claims or snide ad hominems with every further opportunity to provide backup, then you *must* expect that the majority of people will believe you are a liar or a fool -- or both together a liar and a fool at the same time!

Posted by lillipublicans on Jan. 30, 2013 @ 1:57 am

The lottery is a tax on those who failed math. Why should we change the rules to clean up the mess made by the mathematically challenged?

Posted by marcos on Jan. 28, 2013 @ 11:55 am

The expenses come in the conversion costs.

But if homerowners wish to invest in their homes, what concern of yours is that? Nobody forces you to do that.

Posted by Guest on Jan. 28, 2013 @ 12:13 pm

What a brain dead mentally retarded idiot.

Once in the lottery with (tens of?) thousands of others with a 200 unit annual limit, then only the mathematically would expect to convert within a reasonable amount of time.

We've given you a chance to challenge your idiocy but clearly your idiocy has won.

Posted by marcos on Jan. 28, 2013 @ 12:42 pm

because the weighting your bid receives depends on how long you have been entering. So after 7 to 10 years, you are near guaranteed to win.

But yes, of course, the whole idea of a lottery is stupid, which is why another path to homeownership is now being mooted.

Posted by Guest on Jan. 28, 2013 @ 12:53 pm

I sympathize with the TIC owners who have offered their stories above. But the condo conversion rules haven't changed - TIC owners purchased under these rules. In some cases, they purchased under these rules after long-term tenants were forced out, though others may have been long-term tenants themselves who were fortunately able to buy. No one is suggesting that TIC owners should be forced out, simply that their ability to get the economic benefit of condo ownership should happen according to the rules under which they entered the condo process. Those rules are a compromise that protect tenants but also allow some conversions - not the ironclad prevention of conversions that tenant activists would want, nor the unfettered free market that others would want.

It seems disingenuous of the supervisors to suggest that this will have no long-term affect because it is a one-time only measure - there is no immediate crisis which triggers this measure, and folks considering converting apartments to TICs will certainly see that fairly minor political considerations can lead to another such measure. Speculators will assume that they can count on another "one-time only" opportunity in the future.

I think the compromise that exists is better than the "solution" that Wiener and Farrell offer.

Posted by yentu on Jan. 23, 2013 @ 1:06 pm

So using the same logic that you got what you paid for, isn't it an irony when renters can 'own' the units they didn't buy and the owners albeit it's a TIC unit, don't have any rights at all??

Posted by Guest on Jan. 23, 2013 @ 1:35 pm

"A TIC buyer permanently takes rent-conrolled units off the market, which are some of SF's most long-term affordable housing units. By converting from TIC to condo, the TIC buyer pockets the long-term affordablity of the housing unit into his or her individual pocket. The community loses, while the individual TIC/condo speculator wins big."

Rent control was voted in because we wanted to keep some affordable units for people who lived and worked here. We didn't want a city that only the rich can afford with their servants commuting in from Richmond. I'm sorry you don't like it, but many of us really, really like rent control as it allows some normal 99 percenters to live here.

Posted by Sigmarlin on Jan. 23, 2013 @ 3:46 pm

thought they "knew what they were getting into it" except that then the RC rules got repeatedly changed.

Laws don't usually get grandfathered in quite the convenient way you claim.

Posted by anon on Jan. 23, 2013 @ 2:00 pm

1. The rules have changed, several times. Including a significant change after I purchased having to do with how many tickets a building is eligible for.

2. The market's changed too - including a mortgage crisis and ensuing federal and state and even local SF programs to help property owners who find themselves in trouble. TIC mortgages aren't eligible. You may not see an immediate need/crisis, but if you were raising a family, planning for college educations or retirement while facing an underwater, adjustable rate mortgage and watching your neighbors were snapping up historically low, subsidized, fixed 30 year rates... you might have a different perspective.

3. Every wonder why there's a lottery at all?
Because the 200 units was expected to cover all the applicants. The intention wasn't to have property owners waiting decades. The lottery is arbitrary and cruel. It could be changed to a simple waiting list, at least we'd be able to plan.

Posted by TIC_Owner1 on Jan. 23, 2013 @ 3:10 pm

A TIC buyer gets a much lower purchase price than a similar condo buyer for the same-sized unit. If someone is whining about paying more bank interest than a condo owner, this is more than offset by the much lower TIC purchase price and the potential financial upside for the TIC speculator. Plus, it's much riskier to a bank to loan against a TIC verses a condo, so of course the interest rate is bound to be higher. Plus the interest is subsidized by a fed and state income tax write-off, so let's ignore the crocadile tears of the TIC specualtors who post here.

The TIC game is fairly simple. Buy a current rent-controllel apartment on the cheap (compared to a condo). Enter the condo lottery. Get your winning condo lotto ticket punched and make a quick $100,000 - $300,000 just because the unit is now a condo and is forever exempt from rent-control.

A TIC buyer permanently takes rent-conrolled units off the market, which are some of SF's most long-term affordable housing units. By converting from TIC to condo, the TIC buyer pockets the long-term affordablity of the housing unit into his or her individual pocket. The community loses, while the individual TIC/condo speculator wins big.

A TIC buyer adds nothing to the economy. No new housing is built. A TIC owner doesn't even pay the fair value property tax on the condo conversion either, so they far pay less property tax over time than the person who originally bought a condo instead of a TIC.

TIC buyers are economic bottom-feeders. They exist in every economy. Only politicians like Mayor Lee and supervisors like Weiner and Farrell would believe that supporting economic bottom feeders and destroying long-term affordable housing is good for the overall community.

Make no mistake. The "amiable" Mayor Lee is out to destroy the affordability of SF. Between his emphasis on attracting high tech jobs that price current residents out of the housing market, and his encouragement of bottom feeding TIC speculators to make a quick 100 grand flipping rent-controlled units to condos, the mayor and his supporters are waging economic war against anyone who doesn't have an income in the top 20% AMI bracket.

The SFTU slogan says it best: Either organize or move.

Posted by Guest on Jan. 23, 2013 @ 1:16 pm