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

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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

I am a TIC owner in a 4 unit building and everyone in my bldg are also owners. We are all looking to put down our roots in SF and raise our family here. We are just looking to be able to pay a fair mortgage rates. None of us are investors here. Tommi's article is so poorly written and out of touch . Please read over the legislation. The condo bypass lottery would not displace renters. SF could be such a better city with higher number of homeowners who are vested in the future of the city.

Posted by Guest on Jan. 23, 2013 @ 11:31 pm

Once you're a homeowner, they label you as a NIMBY and ignore you.

Posted by marcos on Jan. 24, 2013 @ 9:35 pm

three words, Oakland and BART

Posted by Guest on Jan. 24, 2013 @ 9:29 pm

If you have proof that any TIC eligible for the lottery (& bypass) has broken the law, talk to the DPW or DA. Work to get the existing laws enforced.

Stopping the bypass will do NOTHING to address your complaints as these buildings will still eventually win or bypass the lottery.

Same deal with RC. The future RC status of any currently tenant occupied, lottery (&bypass) eligible units is already determined by existing laws. The bypass may add to the number of RC units available in the future but it can't decrease them.

You want these units covered under RC, change the applicable law. It's not the bypass.

Posted by Guest on Jan. 25, 2013 @ 11:38 am

Part of the bypass legislation has TIC owners contributing up to $20 million dollars towards the creation of affordable housing. Not to mention the jobs created by condo conversion, and the increased revenues to city departments and the property tax base.

http://www.jacksonfuller.com/2013/01/27/tic-lottery-bypass-legislation-i...

Posted by Matt Fuller, GRI on Jan. 27, 2013 @ 3:27 pm

They only want cheap homes for tenants because tenants are somehow considered more "worthy".

Posted by Guest on Jan. 27, 2013 @ 4:03 pm

Condo conversion kills affordable housing because it takes a cheaper TIC and converts into a more expensive condo.

Posted by marcos on Jan. 27, 2013 @ 6:49 pm

lives there after the conversion as before it.

Posted by Guest on Jan. 28, 2013 @ 12:06 pm

incentive for future evictions to convert rent-controlled units to TICs in anticipation of the next lottery bypass likely to be proposed in a few years.

Posted by Eddie on Jan. 28, 2013 @ 3:01 pm

it would be highly speculative and risky to kick out your tenants and lose all that rent in the hope that a one-off bypass might be repeated.

All this bypass does is improve the lives of hundreds of recent tenants who took a risk and bought an already vacant property. This in turn provided new vacancies for hundreds more tenants who were looking for a rental.

Posted by anonymous on Jan. 28, 2013 @ 3:25 pm

vacant property in San Francisco. Those properties became vacant because of eviction (Ellis Act or OMI, mostly) or buyouts under threat of eviction. This process inflates the cost of housing and provides no new units for potential renters or buyers. Your narrative is the stuff of free market science fiction.

Posted by Eddie on Jan. 28, 2013 @ 3:53 pm

been estimated that landlords keep thousands of units empty rather than rent them to a "lifer".

And of course there is still some natural turnover of units, and evictions for cause.

So it is not true that every TIC was caused by an eviction. In the case of my buildings, there was only ever one eviction and the rest became vacant naturally. All became either a TIC or a condo.

Posted by anonymous on Jan. 28, 2013 @ 4:46 pm

if I remember correctly, you bought a building where the previous resident died of AIDS. There's not much natural turnover of affordable private rentals anymore.

As for warehousing, that is unethical and immoral in a time of housing crisis and rampant homelessness. Like withholding food from the hungry or healthcare from the ill, both of which your ideology supports. On the level of war profiteers and enemy collaborators. A problem calling out for, at minimum, a regulatory solution.

Posted by Eddie on Jan. 29, 2013 @ 12:23 am

if I own and live in a TIC, and I convert it to a condo, how does that "kill affordable housing" especially when the outrageous condo conversion fees I'm paying are going towards the construction of new affordable housing?

do you ever listen to yourself? jesus, get out of the condo you own and get some fresh air or something. Posting non-stop on websites and spewing the same shit hour after hour, day after day has just got to be bad for you (i.e. the "progressive" Supervisors will be out to ban it soon enough)

Posted by guest on Jan. 28, 2013 @ 1:35 pm

I have lived in SF for 25 years. 6 years ago I was finally able to afford a home of my own - a TIC. Now I'm facing the same thing as other homeowners that I'm sure all the super left was screaming to save. We thought that when our mortgage started to adjust we could just refinance. Everyone does that, right? But now, no bank will touch a TIC jumbo loan refinance. No bank at all. None of us wants to sell or convert, but the only way to keep our mortgage rate down is to convert. All the existing renters would be protected, even more so than they are now! To the Guest above, we did our homework, but we never thought the economy would crash and the banks would stop doing refis. I am a low-middle class person. If I lose my home, I will have to leave the city. I am the kind of person that you normally would be screaming to protect, if I was a renter. If they don't want a whole new wave of another 2000 tic's entering the lottery, then why not change those rules and not allow TIC's to be formed anymore? And let those of us who have them now keep our homes.

Posted by Guest on Jan. 29, 2013 @ 5:41 am

Watching all these nasty TIC vultures get forclosed and evicted is gonna be sweet.

Posted by Guest on Jan. 29, 2013 @ 9:50 am

becoming routine again.

As much as you appear to love misery, I'm afriad you may have had all the fun you're going to have.

Posted by anon on Jan. 29, 2013 @ 9:58 am

passed by the electorate to fund housing subsidies for displaced protected tenants meaning the elderly, disabled and perhaps others if means testing in place be legal? The new condo's will likely pay more in real estate taxes to begin with. Get additional tax revenue from them while the electorate will still pass it. The changes are inevitable over time, those who want to keep things as they were would be serving their followers better if they worked to manage the change rather than always opposing.

Posted by Guest on Jan. 30, 2013 @ 2:22 pm

needs a 2/3 majority to pass, and homeowners and landlords are enough to ensure it fails.

Posted by anon on Jan. 30, 2013 @ 3:03 pm

that it's about him and those he represents desperately clinging to things as they were in the face of more and more San Franciscans wanting to own their own homes. Time is not on their side.

Posted by Guest on Jan. 30, 2013 @ 2:31 pm

Dear Scott:
In reading your responses to me and others with whom I have shared this information, I am convinced that you seem to miss the essential issues. I find that they have also been stated quite elegantly in the SF Bay Guardian article (available at http://www.sfbg.com/2013/01/22/tic-legislation-rent-control-issue).

You claim your proposals are intended to mitigate the distress of individuals who, became San Francisco homeowners. However, you ignore the fact that they did this at a deep discount by employing a highly questionable practice (using TICs to leverage ones’ way into a condo). Moreover, you ignore the fact that they did this at the expense of the prudent renters of San Francisco who now have substantially fewer rental units from which to choose. You also ignore the fact that most of these “homeowners” made their decision based on the expectation of profit at the expense of their poor, elderly and disabled neighbors.

I too have lost money in San Francisco real estate. I assumed it was a learning experience and
I never expected the City to indemnify me.

Your responses ignore the fact that your proposal is merely an incremental step in the real estate industries’ machine that for many years has been attempting to weaken and eventually dismantle Rent Control. Most critically, you ignore the fact you have now become a cog in this machine.

Because we have never met it is difficult to access whether your are complicit or naive. In either case, it would seem that your most effective action to serve your district would be resignation from The Board, thus saving the voters the cost of a protracted recall effort.

Alternatively, I understand you have an interest in small space housing. Focusing on this highly productive area through the introduction of legislation to encourage the development of back yard cottages would be far more beneficial to both renters and landlords than attempting to dismantle Rent Control, bit by bit. A great resource on this subject can be found at tinyhouseblog.com. I would enthusiastically support your efforts and, as a designer with over 50 years experience, I would work to support the effort.

Posted by Guest Richard Nodine on Jan. 31, 2013 @ 12:41 pm

Tommy knows that it would be easy to increase the number of rent-controlled units in San Francisco by thousands. Just amend the rent ordinance to include all structures built before 2013, instead of before 1978. The Tenants Union could get this enacted with one hand tied behind its back.

Posted by Guest on Mar. 07, 2013 @ 4:46 pm
Posted by Lucretia Snapples on Mar. 07, 2013 @ 6:19 pm
Posted by Guest on Mar. 07, 2013 @ 6:24 pm

If your goal to buy a TIC is not as an investment (i.e. you don't plan to get rich from buying it. A wise friend told me, "don't try to get rich from your primary residence.") and you are planning to live there, then you don't have to worry about rent control. Actually, because of rent control regulations that applies to TIC's, TIC is usually price much less than a similar condo. So you basically pay less money. (Just think about it, without rent control, TIC probably will cost as much as condos.)

And because TIC owners don't want to rent their place out, most are owner occupied (especially in Ellis Acted Buildings, which can't be rented out). Which means you don't have neighbors who are renters and who don't take care the place.

Also, because TIC loan all require 25% down, means you don't get poor people in your building. (Which sound bad, but it is good thing for living environment if you don't have to live next to poor people).

Only downside is that so few banks give fractional loans, the loan rate is a lot higher. But that isn't problem if you can afford to pay cash for the place.

So TIC and rent control associated with them is great for well off people who can get a great discount for a place.

Posted by tw on Jun. 12, 2013 @ 10:47 am

ordinary people who just want a home that is theirs. They aren't speculating, flipping, evicting or anything else other than simply wanting some security and control, and to build some equity.

The way tenant activists have tried to paint these people as evil has been appalling.

One correction though. Ellis'ed buildings can be re-rented. You just have to wait either 5 or 10 years before you are totally free to rent to anyone at a market rent.

So it can be valid to Ellis, live there, and then rent out after 5 to 10 years. Still under rent control, sadly, but at least you get a market rent which should be a doozie at this time.

Posted by Guest on Jun. 12, 2013 @ 11:01 am

You can’t avoid being evicted just because you’re a good tenant who pays the rent on time and keeps quiet. Property owners can throw all kinds of reasons out to get give renters the boot so they can squeeze more out of the market. So rent control isn’t a desirable position to be in if you’re a landlord – especially if your property is increasing in value because of its location, etc. But I would rather have a long-term tenant, supplying me consistently with income than go through the conversion process, which could mean I don’t receive any revenue for an undisclosed amount of time. There are decent owners out there who consider the plight of their tenants too…

Posted by Spot Thedog on Sep. 12, 2013 @ 12:03 am