Supes scramble to find TIC deal

|
(158)
Sup. Norman Yee is in the middle of talks on the TIC bill

Some San Francisco supervisors are scrambling to find an acceptable compromise that would prevent condo-conversion legislation by Sups. Scott Wiener and Mark Farrell from becoming a bitter battle that could be a no-win situation for centrists.

Board President David Chiu is meeting with tenant groups and trying to craft an alternative to the proposal, which would allow some 2,000 tenancy in common units to convert to condominiums. Wiener says the legislation is needed to provide housing stability to people in the almost-but-not-quite-a-condo world of TICs. Tenant activists who have met with Chiu say he's discussing ways to limit speculation, which might include a five-year ban on the resale of converted condos. But that won't be anywhere near enough for the tenant groups.

In fact, tenant and landlord groups are both talking to Sup. Norman Yee, who will be one of the swing votes, and who could introduce a series of amendments to the Wiener/Farrell bill that would be more palatable to tenants.

"They've had a couple of meetings," Yee told me. "We're just examining the issues to see if there's a compromise. It would be great if we could work something out so the supervisors could feel better about voting on this."

But any deal, Ted Gullicksen of the San Francisco Tenants Union told me, would require "structural reform of the future condo-conversion process."

Yee could probably get away with that -- he's never relied on landlords or real-estate interests for his campaign money, and there aren't that many TIC owners in his district, which is largely single-family homes. This won't be a vote that will make or break his future in District 7.

On the other hand, it could be a huge issue for Sup. London Breed, who represents a district with a huge majority of tenants and the most progressive voting record in the city. Breed insists that she hasn't made up her mind on the issue, and she told me she agrees she's on the hot seat here: Much of her political and financial support came from Plan C and real-estate interests that want more condo conversions, but she would face furious policial fallout if she voted against tenants. "I am open to a compromise, but only if it's good policy for the city," she said.

Supervisors David Campos and John Avalos are strongly against the TIC bill, and it's likely that Sups. Eric Mar (who got immense support from tenants in his recent re-election) and Jane Kim (who didn't support the measure in committee) will oppose it unless it's altered in a way that tenants can accept.

Naturally, Farrell and Wiener are on the yes side, as is, almost certainly, Sup. Carmen Chu.

That leaves Breed, Chiu, Yee, and Sup. Malia Cohen -- and three of them have to vote Aye for the bill to pass. Chiu wants to run for state Assembly from the tenant-heavy side of the city, but, as always, he's looking for a way to avoid an ugly fight.

The problem is that the tenants aren't going to sign off on anything modest; if they're going to accept the conversion of 2,000 units that used to be rental housing, they're going to want to be absolutely certain it doesn't happen again -- and that there are new rules in place that halt the rampant assault on existing rent-controlled housing.

So either the folks in the center -- Yee, Breed, Chiu, and Cohen -- are going to have to force the landlords to accept some long-term reforms that they won't like, or politicans like Breed are going to be forced to take a yes or not vote that could come back to haunt them.

 

 

 

 

Comments

Sorry, I meant tenure of a building, not tenancy.

Posted by marcos on Feb. 17, 2013 @ 6:36 pm

and the market rent. It's really not very complicated.

Whiles are far more aggressive about asserting RC "rights". The vast majority of people at the SFTU are whites.

Posted by Guest on Feb. 17, 2013 @ 6:22 pm

If a landlord was actually losing money, the amount that he was losing on the property *could* be considered a subsidy. But no way is it a subsidy in any way shape or form if the landlord is making money off the property, simply because he could potentially make even more. That's just absurd.

Posted by Greg on Feb. 17, 2013 @ 7:42 pm

The average SF home costs about $720K.

To buy that with, say, a 4% mortgage will cost $28,800 per annum.

The property tax on that will be about $7,500 per annum.

Add those together and you get over $36,000 per annum, or $3K a month, which happens to be about the average rent in SF.

So the LL makes no money on that, even before expenses on insurance, repairs etc.

You complain about rents of 3K per month as if the landlord has no costs. There is a reason why SF rents are high - it's because SF costs are high. It's not greed; it's necessity.

And if you are paying $750 per month, can you see the problem? And why you will likely be Ellis'ed?

Posted by Guest on Feb. 18, 2013 @ 5:59 am

buying their properties right now. Most have owned them for many years and their monthly costs are much lower.

By your (lack of) reasoning, property owners that purchased their similar properties to yours are subsidizing you because you pay less than the current market mortgage payment. Why are you stealing from them?

Posted by Eddie on Feb. 18, 2013 @ 8:33 am

My response was meant for "Guest," not you. There you go again stealing my thunder at the exact same time!

Posted by Greg on Feb. 18, 2013 @ 8:47 am

It's a glitch in the website design. No thunder taken from your comprehensive comment.

The better question is why are we wasting our time on the guest's (anon's) false definition of the word "subsidy?"

Posted by Eddie on Feb. 18, 2013 @ 9:09 am

There are some problems with your math, Guestie.

Your math doesn't include the mortgage interest deduction, so you can lop off about a third of the landlord's cost right there.

Your math doesn't include the portion of the ROI that comes from appreciation, which is always part of the equation in a real estate investment. If you want to say that's speculative, that's fine, but that's why they call it risk. Capitalists often justify their right to make outrageous profits based on the fact that they're risking their investment. If you don't like the risk, don't make the investment.

But the biggest problem with your argument is that only a tiny percentage of the landlords out there have mortgages based on today's prices, and you know that. By asking tenants to pay full market rent, you know full well that most landlords are asking them to cover many times what their expenses are.

You want a landlord who bought their property in 1979 to continue paying taxes at 1979 levels. You want their mortgage to stay at the 1979 level (or none at all by this point). And you want tenants to pay full "market" price in perpetuity. You want rent control for landlords but not for tenants. You want security for the the rich (securing their profits), and insecurity for everyone else. It's hypocritical, it's disgusting, and it's plain to see.

Posted by Greg on Feb. 18, 2013 @ 8:43 am

The rental business is clearly evil. Fortunately, state law allows owners to exit the business (Ellis Act), and create a more fair, shared ownership situation (TICs).

Posted by Guest on Feb. 18, 2013 @ 9:22 am

owner-occupiers. All a LL can do is deduct the interest against his rent. In the example cited (rent = 36K; cost = 36K) there is no profit and so no interestd eduction.

Appreciation is not income; properties can lose value, say if they are full of low-rent tenants.

If the LL has paid down his mortgage, that is capital not income. And then he simply has an "opportunity cost" rather than an "interest cost". Same difference really.

Posted by Guest on Feb. 18, 2013 @ 10:02 am

This is why few people buy property in SF to remain in the rental business.

Posted by Guest on Feb. 18, 2013 @ 9:11 am

either it is exempt from rent control OR you plan to Ellis/TIC it or TIC/Ellis it.

Posted by Guest on Feb. 18, 2013 @ 10:04 am

The demise of the great US experiment for the lower and middle-classes started ending about 40-50 years ago when landlords began gaining control of some of the most valuable residential real estate on both coastlines. No longer is housing considered merely a utility to keep a roof over a family's head, but it's become a weapon to extract ever larger amounts of money from tenants. Many of our forebears fled Europe, Mexico, Asia, and many other places where landlords control the vast majority of the country's wealth, and increases to wages were merely transferred to the wealthy landlords in the form of higher rents. The US has joined these other countries and enacted very regressive payroll and sales taxes over this same 40-50 year period, further reducing the disposable income of modest income families.

Like many valuable assets, once a family can afford to own rental property (including individual house and condos) they rarely sell them since the income stream (rents) keep increasing over time and the underlying real estate asset generally keeps going up in value, partly caused by loose monetary policies of the elite bankers. These housing units rarely make it back into the home ownership pool, making home availability and affordability that much harder for the vast majority of families who just want a stable living arrangement not subject to the whims of a profit-maximizing landlord.

Just as a slave owner is constantly trying to get more labor from his charges, a landlord has the same goal of getting as much rent as possible from tenants. If another tenant can pay more, the landlord will either increase the rent to the amount others are willing to pay, or the landlord will evict the family and replace them with higher paying tenants.

The financial assault on tenants throughout the Bay Area, where literally billions of dollars are transferred every month in rent payments from mostly the 66%ers to the wealthiest top 20%ers, is breathtaking. Not only do the high rents take substantial amounts of disposible income from workers' paychecks, but the instability and insecurity to millions of Bay Area families is substantial.

What's equally appalling is that the state and federal government give these same landlords tens of billions worth of tax write-offs every year, even though the landlords didn't build the housing units in the first place. (New construction is done by a very different group of economic players - developers and builders.) These lucrative tax shelters reduce landlord's reported income by billions, and the government gets less tax revenue and we get underfunded services and increased government debt, which benefits still another group of very wealthy economic players - the bondholders.

The naked grab for quick economic gain by the 2,000 TIC owners should be a strong motivation for city government to really examine the housing market and the related tax subsidies. Although I suspect what's really at play in SF is to make sure current and future politicians don't have the community support and courage to really take on the wealthy landlords and their powerful banker and state/federal politician enablers.

Until then, tenants should get comfortable with a slave mentality where one of their main functions during a short life is to keep paying higher and higher rents as long as the population keeps increasing and high-paying jobs are being created.

I forget who described the US economy but it was something like, in the US you're either a lender or a borrower; employer or employee; landlord or tenant; mortgagor or mortgagee; lesser or lessee; fucker or fuckee. Depending on which side of the equation one stands goes a long way towards determining the amount of financial stability and security in one's life.

Posted by Guest on Feb. 17, 2013 @ 7:05 pm
Posted by Guest on Feb. 18, 2013 @ 2:53 pm

Eddie's right. TIC owners knew what they were getting into. Now they want to change the rules because they're playing the politics of envy and class warfare. This has been just too divisive. I don't see why we needed to reopen this old wound on behalf of a tiny special interest.

Posted by Greg on Feb. 16, 2013 @ 9:36 am

So why do they whine about it and want the rules changed?

Posted by Guest on Feb. 16, 2013 @ 10:26 am

You may or may not be able to prevent the sale, but you could definitely regulate the purchase.

This bale out of TIC suckers proves that this condo conversion scheme should be regulated the same way as any other scam partnership.

http://en.wikipedia.org/wiki/Accredited_investor

"Accredited investor is a term defined by various countries' securities laws that delineates investors permitted to invest in certain types of higher risk investments including seed money, limited partnerships, hedge funds, private placements, and angel investor networks. The term generally includes wealthy individuals and organizations such as banks, insurance companies, significant charities, some corporations, endowments, and retirement plans.
In the United States, for an individual to be considered an accredited investor, he or she must have a net worth of at least one million US dollars, not including the value of one's primary residence or have income at least $200,000 each year for the last two years (or $300,000 together with his or her spouse if married) and have the expectation to make the same amount this year."[1] This rule came into effect in 1933 by way of the Securities Act of 1933."

Posted by Guest on Feb. 17, 2013 @ 8:33 am

It's unlikely to apply to a crappy 2-unit building in the Mission.

Posted by Guest on Feb. 17, 2013 @ 9:30 am

The point being that regulating the purchase of TICs would be completely constitutional.

"I doubt that it would be constitutional to limit the ability of
any property owner to sell their property at any time if they wish to."

Posted by Guest on Feb. 17, 2013 @ 9:49 am

limit the rights of people to sell their homes?

Ha. Good luck with that.

Posted by Guest on Feb. 17, 2013 @ 11:29 am

"Purchase."

Posted by Guest on Feb. 17, 2013 @ 11:46 am

allow anyone to buy it?

What do you think the chances of passing such a constitutional amendment are, realistically?

Bierman tried to outlaw the formation of TIC's over a decade ago, and it was ruled unconstiutional.

Posted by Guest on Feb. 17, 2013 @ 12:14 pm

It is constitutional already.

Accredited investors could buy them.

Posted by Guest on Feb. 17, 2013 @ 12:33 pm

limit who could buy TIC's.

Hedge funds are subject to the Securities Act, which TIC's are not. And Hedge funds are domiciled overseas and whereas TIC's are not.

You are talking out of your ass.

Posted by Guest on Feb. 17, 2013 @ 2:18 pm

Weak.

Posted by Guest on Feb. 18, 2013 @ 7:56 am

Just a limp self-serving cateogrization?

Posted by Guest on Feb. 18, 2013 @ 9:59 am

The "wrath" of the Bay Guardian aint what it used to be.

the weekly 36-pg. blog owned by the Examiner has lost its clout.

Old hippies will disagree. The rest will not.

Witness the number of candidates who come round to the SFBG blog and seek its endorsementsthese days. Not many. It used to be the Torquemada test for all pols.

Posted by Guest on Feb. 15, 2013 @ 3:01 pm

Well, it's still here. Get used to it.

Posted by Guest on Feb. 15, 2013 @ 3:08 pm

Or is a pale shadow of its former self, hanging on by its proverbial bloody fingernails?

Posted by Lucretia Snapples on Feb. 15, 2013 @ 3:25 pm

What would you do with yourself otherwise, Lucretia?

Posted by Guest on Feb. 15, 2013 @ 4:12 pm
Posted by Lucretia Snapples on Feb. 15, 2013 @ 5:07 pm

Down to 36 pages and still thinning

Seriously, the Examiner's SFBG blog needs to become paperless and join the rest of the blog world. You're already counting on unpaid ploggers for your content.

Don't be afraid to plead poverty..

Posted by Guest on Feb. 15, 2013 @ 6:36 pm

Down to 36 pages and still thinning

Seriously, the Examiner's SFBG blog needs to become paperless and join the rest of the blog world. You're already counting on unpaid ploggers for your content.

Don't be afraid to plead poverty..

Posted by Guest on Feb. 15, 2013 @ 6:36 pm

Ms Breed: "I am open to a compromise, but only if it's good policy for the city," she said.

Which city?

There's the city of the increasing wealthy and the Real Estate Industrial Complex.
There's the city of the tenants/renter.
There's the city of the homeless and street people...which is only going to grow (just look around at things).

This city is not a unified city whatsoever. Therefore, which city is she going to be working for? I would suspect her focus will be on the city of the increasing wealthy and the Real Estate Industrial Complex, their real estate liars and their corporatist politicians.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 15, 2013 @ 3:38 pm

First classify people into groups

Then try and promote hatred between those groups.

Then pick your side and demand total victory in the resultant class war.

Or, we could all just get along, and we realize that we all have a common interest in a more vibrant and successful city.

Posted by Guest on Feb. 15, 2013 @ 3:53 pm

"Therefore I propose to unify it by insulting and denigrating everyone with which I disagree."

Posted by Lucretia Snapples on Feb. 15, 2013 @ 3:59 pm

I'm not sure why it is, but it seems some people on the left are very quick to paint people in simple terms. If they think politicians can be so easily labeled and that the rest of us can be divided into neat little boxes, it makes me suspect their entire viewpoint about substantive issues that often require much more shading and understanding of other viewpoints.

If the left spent less time calling people names and putting people in boxes, and spent the energy on the issues themselves and/or on supporting candidates to replace the ones who disappoint them, a lot more positive outcomes might happen in politics.

When we call people names or try to force them into our own narrow viewpoints, the ability for future conversations and potential influence are over. Shame and denigration rarely work to get people to listen or act on our point of view. It may make us feel better to call people names or paint them in simplistic terms, but it can actually hurt other people on our side who may be trying to acheive similar goals. I don't think the tactics of Karl Rove have ever worked well in SF since so many of the residents are highy educated and well-read.

Posted by Guest on Feb. 15, 2013 @ 4:53 pm

promote the hatred between classes of people that is their SOP.

Posted by Guest on Feb. 15, 2013 @ 6:08 pm

I'm not sure why it is, but it seems some people on the right can't stand it when their transparent agenda, tactics, and word manipulation (which your post is saturated with, pleb) are exposed for what they are. You're not fooling anyone with that smug, elitist propaganda, pleb.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 15, 2013 @ 6:57 pm

Great. Another fired up San Francisco Army of One. Maybe you, lilli, and marcos can at least try to make it an army of three, but my bet is that the first meeting barely lasts an hour before all sorts of irreconciable divisions occur while the first page of the manifesto is being drafted.

Good luck with all the anger and bitterness. Those traits will take you very far to meeting your life goals.

Posted by Ex-Int'l Troll Society Member on Feb. 15, 2013 @ 9:12 pm

Clearly you meant to write to someone else and hit the wrong Reply button in your anger. (Temper, temper. ) Don't they provide psychological services to help you work through that there in the ward, pleb? Aren't psychological services covered under the group rate you have? And it's past 9pm, so what are you still doing on here when visiting hours are over? Or do they think you're googling your drug therapy program? You shouldn't try to deceive them pleb, although when that's a habit for a person I can imagine that would be hard to break.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 15, 2013 @ 9:46 pm

This battle is about voter demographics. The lefter wing of the politicos in SF know that they must keep the City more than 50% renter. The less left wing of the politicos knows that homeowners vote more conservatively and wish to encourage it.

Posted by Guest on Feb. 15, 2013 @ 3:49 pm

his spare bedroom to house someone poor or homeless. But of course he does not. Nor does marcos, Hestor, Welch and all the other hypocrits.

It's all about seeing the SFBG voting bloc get smaller and smaller

Posted by Guest on Feb. 15, 2013 @ 6:10 pm

Just imagine the reaction if someone proposed controlling the resale price of houses in SF, in a manner analogous to rent control.

I suspect that Marcos', Tim's, et. al. long-term financial plans all are to sell their SF residential property at a massive profit, in a manner analogous to Brugmann's large profit on his SF commercial real estate transaction.

That, of course, is perfectly acceptable - renting out units at market rates is not.

Posted by Demented, Yet Terribly, Terribly, Persistent on Feb. 15, 2013 @ 7:36 pm

Buying a home and living in it for years, for decades and then cashing in as a retirement plan is not the same thing as buying homes and flipping then for quick bucks.

Posted by marcos on Feb. 15, 2013 @ 8:24 pm

"and then cashing in as a retirement plan".

Disgusting profiteer - planning on paying for your retirement via real-estate speculation.

Don't you have any feelings for the poor house purchaser you will be ripping off?

Your house should be allowed to increase in value each year by the rate of inflation - anything more than that is exploitation.

Posted by Demented, Yet Terribly, Terribly, Persistent on Feb. 15, 2013 @ 8:38 pm

Long term capital accumulation via owner, family occupied primary home is as American as apple pie and trails, does not lead, speculation in housing.

Posted by marcos on Feb. 15, 2013 @ 9:02 pm

There is not a time period after which "speculation" becomes investment.

The IRS define one, however - one year - the difference between short-term and long-term capital gains. So that's a workable definition. More than one eyar, it is not speculation.

Not that I think there is anything wrong with risk-taking ventures anyway, and I wish ou luck with yours, and hope the socialists here do not try and ban or confiscate your well-deserved profits.

Posted by Guest on Feb. 16, 2013 @ 8:04 am

Don't try to conflate the conduct of a few tens of thousands of real estate speculators with the conservative housing finance approach of almost all US homeowners. There is no comparison at all.

Posted by marcos on Feb. 16, 2013 @ 8:20 am

I've owned 8 properties over 30 years. Does that make me a flipper or an investor?

And I've only emptied tenants out of 3 of those properties.

Posted by Guest on Feb. 16, 2013 @ 9:29 am