Condo conversion legislation on hold for now

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Tenants rallied outside City Hall in a show of opposition to proposed condo-conversion legislation
Guardian Photo by Rebecca Bowe

Following a contentious five-hour hearing, a committee of the Board of Supervisors postponed voting on a controversial housing proposal, and agreed to revisit the issue on Feb. 25. Over the next few weeks, opposing sides are expected to negotiate a possible alternative.

Authored by Sups. Scott Wiener and Mark Farrell, the proposed condo conversion impact fee would have allowed as many as 2,000 tenancy-in-common (TIC) units to be immediately converted to condos for a fee, allowing owners to bypass a housing lottery system that places an annual cap on conversions.

While TIC owners voiced frustration about the backlogged lottery system, tenants expressed fears that the legislation could give rise to a wave of Ellis Act evictions if landlords or speculators interpreted it as a signal that lucrative condo conversion would be easier to achieve.

Prior to the hearing, a group of tenants gathered in front of City Hall in a show of opposition to the condo-conversion legislation, waving signs that read, “Stop the Attack on Rent Control.”

“The reality is, if this legislation passes, there will be more evictions in San Francisco,” said Tommi Avicolli Mecca of the Housing Rights Committee, who spoke at the rally.

Tenant advocates worry that the legislation would result in a permanent loss of affordable, rent-controlled units from the city's housing stock, at a time when rents are soaring. When landlords rent out their condos or TICs in San Francisco, there's a key difference: TICs are covered by rent control, but condos are exempt.

"I've been evicted three times," one woman said while addressing members of the Land Use & Economic Development Committee. "I know so many people who have gotten evicted. I don't know anyone who's won their case against eviction."

During the hearing, Farrell adopted a defensive tone against critics who’d described the proposal as an attack on rent control. “The tactics that these opponents have deployed is out of line,” he said. To assuage concerns, he noted that he and Wiener had included a provision guaranteeing lifetime leases for existing tenants in units that qualified for condo conversion under the program.

But Sup. Jane Kim drilled down on this detail, questioning whether such an agreement would be legally enforceable in the long run. In response, a representative from the City Attorney’s office said he thought the provision was on solid legal ground, but noted that the specific matter “has not been litigated before,” meaning there is still a question as to whether it could withstand a court challenge. When Kim asked if any funding was set aside to enforce these lifetime leases, the response was "no."

Board President David Chiu proposed holding off on a vote for several weeks. “I do not support the legislation in its current form,” he said. If the current generation of TIC owners were allowed to convert this time, he explained, the next generation’s frustrations with the housing lottery would only “lead us back to an identical debate in a short period of time.”

Kim echoed this point. “My concern was that … folks were looking at this legislation as an ice-break for more condo conversion,” she said just after a public comment session that lasted several hours. And she acknowledged that there is a larger problem to consider. "It's very tragic that we have set up a situation where [TICs and renters] are pitted against one another," she said.

Comments

Why that hamburger is already made! I'm not killing anything!

Posted by lillipublicans on Jan. 29, 2013 @ 10:18 pm

wanting to own a condo somehow makes you the antichrist.

Posted by anon on Jan. 29, 2013 @ 12:30 pm

Those who owned this unit before we did played by the rules as did we.

TIC members of housing communes played by the rules, don't like the outcomes from playing by the rules, and wants others to change the rules so that they can get out from under the housing communes that they contracted to join.

I'm not asking the City to change the rules to get me out of a bind, but TIC housing commune members are demanding the City change the rules to make them richer.

Posted by marcos on Jan. 29, 2013 @ 12:40 pm

Both are forms of shared ownership and both are the most affordable option for tenants who no longer want to rent.

You are trying to forge a distinction but there really isn't one. We should encourage all cheaper forms of housing in SF.

Posted by anon on Jan. 29, 2013 @ 12:52 pm

to the banks. I agree; let's encourage cheaper forms of housing including rent controlled apartments.

Posted by Eddie on Jan. 29, 2013 @ 1:20 pm

enough to not be finessed out of it is fine by me.

Posted by anon on Jan. 29, 2013 @ 1:59 pm

refer to tenants in rent controlled apartments as losers, parasites and freeloaders?

Posted by Eddie on Jan. 29, 2013 @ 4:32 pm

Didn't tenants want the rules changed at some point? Isn't that why we have rent control? Oh...I forgot...in this town, the tenant is king and property owners, including those who live in their own properties, are evil.

The proposal at hand calls for a $20K per unit conversion fee, this is not something every TIC owner will be able to come up with. As many have pointed out, the value of the properties will increase, but so will the property taxes which is the kitty from which the City draws from to support many of the low-income/homeless programs. Not every owner-occupied TIC will suddenly move out and rent thier homes. The lifetime lease will protect any renters. Don't worry too much about there not currently being any funding with the City Attorney's Office, when they want to, they find the money.

Posted by roflynn on Jan. 29, 2013 @ 1:54 pm

Your Prop 13 grandfathering remians in place. Of course, the city makes money from the fees involved but your P13 basis remains.

Ideally, the resultant refi's could cover the 20K since the conversion will increase appraisals. It might be a nice gesture if the city deferrred some of the fee until after conversion and refi.

I doubt that many of these units would then be re-rented. It took too much blood and sweat and tears to get the unit back from tenants in the first place.

Posted by anon on Jan. 29, 2013 @ 2:07 pm

The families' biological clocks are ticking and their inevitable retreat to the suburbs to spawn is always just around the corner. How ever will they pay for that home in the exurbs?

Posted by marcos on Jan. 29, 2013 @ 2:23 pm

Yet if someone may the same kind of hate speech against gays, you'd be crying out for priviliged victim status.

Are you really surprised that you have no influence in this town, despite thousands of "man" hours of effort?

Posted by anon on Jan. 29, 2013 @ 2:37 pm

SPUR's goal is to create a climate where young upwardly mobile white and Asian people swim in San Francisco's gene pool, identify a mate, and then fling themselves over a bridge to a suburban idyll where they spawn.

Most of the world's hets do just fine raising kids in locations much more hostile to children than San Francisco. Few of those who can afford to raise kids here would even consider such a notion.

Posted by marcos on Jan. 29, 2013 @ 2:56 pm
Posted by anon on Jan. 29, 2013 @ 3:20 pm

I was under the impression that the conversion to condo would change the status of the property such that property taxes would be increased accordingly. The units will be made stand alone, each one with individual owners rather than a single building with multiple owners. I thought that change in the ownership would need to be recorded with the Tax Assessors Office opening the door for re-assessment.

I think your idea about deferring the fee until the financing is in place is a good one.

Posted by roflynn on Jan. 29, 2013 @ 3:21 pm

Prop 13 may not be in play here. Instead of one building with multiple owners, there will be units with individual owners. I beleive this change in ownerhip status will need to be documented with the Tax Assessor's Office and opens the door for property re-assessment of the value of the individual units rather than the building as a whole.

Posted by roflynn on Jan. 29, 2013 @ 3:30 pm

the Prop 13 basis is NOT increased. The reason is simple - the unit did not change hands.

Posted by anon on Jan. 29, 2013 @ 3:47 pm

he or she immediately wants nobody else to have a chance at the same.

Posted by anon on Jan. 29, 2013 @ 12:04 pm

will come down, helping hundreds of families with their bills.

Posted by anon on Jan. 29, 2013 @ 12:07 pm

And allowing more money to be spent within our community as opposed to going to banks.

Has anyone calculated the actual amounts?

Posted by Guest on Jan. 29, 2013 @ 1:12 pm

lottery was 20K. A lot but then conversion costs can easily be 20K anyway.

So if 2,000 buildings are bypassed, that is $20,000 times 2,000 or 40 million for the city.

Plus of course the DBI fees and regular DPW fees.

Posted by anon on Jan. 29, 2013 @ 1:25 pm

of factors, including length of time in the condo conversion lottery.

Posted by Eddie on Jan. 29, 2013 @ 1:37 pm

reasonable to cut someone some slack if they have already been in the lottery for several years.

Even so, can you deny that the city does really well out of conversions? They can make the fee whatever they want. From memory, the application fee is maybe 5K and the DBI fee perhaps 4K.

And it's really not a lot of work.

Posted by anon on Jan. 29, 2013 @ 2:04 pm

you can't just compare the mortgage payment to comparable rent. you need to factor in property taxe$$$ and in most cases HOA fees too. then you can compare apples to apples.

Posted by Guest on Jan. 29, 2013 @ 4:20 pm

Have you not figured out that a TIC is not a home of your own yet?

Posted by marcos on Jan. 29, 2013 @ 9:17 am

You want to help tenants, right?

Posted by anon on Jan. 29, 2013 @ 9:36 am

Few tenants chose TICs, they are the choice of a slim minority of tenants.

Posted by marcos on Jan. 29, 2013 @ 10:11 am

out anyway. Choosy landlords choose tenants who won't stick around.

Posted by anon on Jan. 29, 2013 @ 12:08 pm

" no bank will touch a TIC jumbo loan refinance. "

And there you have it, the scheme collapses without support from the feds.

Posted by Guest on Jan. 29, 2013 @ 9:37 am

one property with multiple owners.

And now there are fractional TIC loans as well.

But, yes, it would be better to clean up these titles, help these owners and allow a quick and easy condo conversion path.

Posted by anon on Jan. 29, 2013 @ 9:46 am

Help the liars out of their liar loans.

Posted by Guest on Jan. 29, 2013 @ 10:01 am

who were previously struggling. Foreclosures were never high in Sf anyway but are now dwindling to nothing.

Posted by anon on Jan. 29, 2013 @ 10:20 am

According to hotpads, there are still about 1000 homes in foreclosure in SF.

If the RE market is so good, then why can't TIC commune members figure out how to refinance on the level, playing by the rules instead of forcing us to change the rules to benefit them and them alone?

Posted by marcos on Jan. 29, 2013 @ 10:34 am

should we help them a little?

DOM is just a few days in SF right now so what foreclosures you see are probably already under contract or priced wrong.

Posted by anon on Jan. 29, 2013 @ 12:05 pm

TIC shareholders are members of a housing commune, they are not homeowners. If they were homeowners, then there would be no problem.

Posted by marcos on Jan. 29, 2013 @ 12:26 pm

access to and usage of a particular unit, and their ownership percentage reflects the housing available to them.

It is subtley different from co-ops in NYC, which typically are much larger buildings, but the principle is well established.

It may not be ideal, but it works for many tenants who otherwise would remain forever at the mercy of their landlords. You want to help tenants, right?

Posted by anon on Jan. 29, 2013 @ 12:45 pm

I want to help tenants stay tenants if they want to.

Posted by marcos on Jan. 29, 2013 @ 1:04 pm

even under rent control. There are 15 just causes for eviction and only about half of them involve the tenant doing anything wrong. A tenant never really has security which is why you bought a condo and all these other tenants buy TIC's.

It will not harm your property value, nor any existing tenant, if a few TIC owners are allowed a dream

Oh, and the city will make millions in fees.

Posted by anon on Jan. 29, 2013 @ 1:22 pm

State law precludes prohibiting TIC conversions, it was tried a decade ago and slapped down in court.

Posted by marcos on Jan. 29, 2013 @ 10:17 am

TIC isn't a type of unit. it's a form of ownership, and therefore cannot be "banned".

Posted by anon on Jan. 29, 2013 @ 10:28 am

“has not been litigated before” as an argument for why lifetime leases cannot be enforced is absurd. If this was the standard, no news laws should ever be implemented, because by definition, they could not have ever been litigated before (in a given city proposing the new law).
If the city wants rent control for diversity and lower income folks -- the reason it was instituted, why do they fight "means testing", proving the tenants both live and work in the city and make under an agreed income amount.
Why should landlords subsidize tenants making $100K and up a year? ... or who work elsewhere? Everyone wants to live in SF, why should that make it your right? Oh, because you got here first? Rent control is benefiting more who would not meet the criteria it is supposed to help, than those it was designed for. Renters, in the majority and the ones who benefit most, want to keep it that way. Fairness or meeting rent control;s goals has been forgotten and replaced with "I want to keep what I have, pass it on if I can, make money off of the rental if I want to, but have none of the burdens of the property owner." Of course, this is not true of all rent controlled tenants. Working class tenants trying to survive and raise families in the city are the least likely to have the time to be spending fighting for themselves and others like them who do deserve help with rent.

Posted by Guest on Jan. 29, 2013 @ 6:29 am

Ellis'ed buildings cannot be condo converted anyway.

The detractors never acknowledge that fact which, at a stroke, demolishes the argument that allowing these former tenants to condo convert will not lead to a single new eviction.

Posted by Guest on Jan. 29, 2013 @ 7:21 am

Renters refuse to pay for the bad business decisions of unsophisticated TIC real estate investors. Place the blame where it belongs at the feet of the psychos who sold you these fraudulent mortgage products.

Posted by Guest on Jan. 29, 2013 @ 8:15 am

suffer the most whether reale state markets are good or bad.

Jim Ellis did a number on you.

Posted by Guest on Jan. 29, 2013 @ 9:03 am

Nothing is more pathetic than the crybaby wannabe real estate TIC conmen losing their life savings because the government won't let them out of their imploding stated income fraud.

Posted by Guest on Jan. 29, 2013 @ 9:21 am

The vast majority of mortgages are being paid on time, regardless of property type or loan type. It's the marginal cases that are failing, and that is always going to be true anyway.

SF RE prices are now back to their pre-crash high, by the way. Recession? What recession?

Posted by anon on Jan. 29, 2013 @ 9:37 am

Quantitative easing and raising the subsidy for jumbo loans goosing SF home values, what quantitative easing, what jumbo subsidies?

Posted by marcos on Jan. 29, 2013 @ 10:16 am

Every investor knows that.

Posted by anon on Jan. 29, 2013 @ 10:27 am

You're gonna get drowned in red ink and unserviceable debt as they mop up those trillions in quantitatively eased liquidity when they raise interest rates.

Posted by marcos on Jan. 29, 2013 @ 10:43 am

There's always a bull market somewhere

Posted by anon on Jan. 29, 2013 @ 12:10 pm

"God must be dead if you're alive."

Posted by Eddie on Jan. 29, 2013 @ 12:36 pm