Plan C, and the C stands for Condo conversions

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No politically savvy San Franciscan has ever really bought the rhetoric espoused by the so-called “moderate” political action group Plan C that it's all about finding middle ground between what its website calls “a 'downtown' machine, and a far-left, dogmatic, so-called 'progressive' machine.” As if that unbalanced labeling wasn't enough of a indicator, the fact that its funding comes from all the biggest cogs in the downtown machine should be.

But now, as the group's members aggressively work to open the flood gates on converting San Francisco's rent-controlled apartments into privately controlled condominiums, it's become more clear than ever that the C stands for Condo and that the financially motivated group is moving the agenda of the real-estate and investment interests that dominate its Board of Directors.

City Hall sources connected to the ongoing meetings that Sups. David Chiu and Mark Farrell have been holding with stakeholders on the controversial condo lottery bypass legislation sponsored by Farrell and Sup. Scott Wiener say there were indications of possible compromise that came out of the first mediation meeting.

That one primarily involved the tenant advocates who have led the charge against the legislation and the representatives for tenancy-in-common owners seeking to buy a bypass to the city's condo conversion lottery that only allows 200 new condos per year. There were whispers that came from that meeting of a compromise that would allow a one-time bypass in exchange for shutting down the lottery for several years, or indexing it to the construction of new housing for low-income San Franciscans.

Since then, the sources say, Plan C and their partners in the real-estate industry have dominated the meetings with their dogmatic advocacy for indefinitely allowing the maximum number of condo conversions. Despite public statements by Farrell and Wiener that they just want to clear out some backlog without encouraging more landlords to convert apartments to TICs in the future, Plan C just wants to feed more affordable apartments into the expensive real estate market.

Some basic research on the group and its Board of Directors seems to show that this position is about financial self-interest rather than values or ideology.

Plan C Co-Chair Steve Adams is a regional manager for Sterling Bank & Trust, which has consistently been one of the city's top TIC lenders and which recently sponsored a forum encouraging more conversion of apartments, promising to increase its loan volume, and painting a rosy picture of the TIC financing market that belies Wiener's claims that TIC owners can't get financial relief and need the city's intervention.

One of the key presenters at that symposium was TIC attorney Lyssa Paul, who is also a Plan C board member and someone who makes her living creating more TICs. Other members of the 12-member board who make their living in the real estate industry and benefit directly for TICs conversions are Amanda Jones and Brian Hecktman. Other bankers or investment managers on the board that benefit from the TIC business are Ashley Lyon and Bob Gain.

Co-Chair Mike Sullivan is a venture capital attorney who created Plan C in 2001 and used it to help then-Sup. Gavin Newsom sell his Care Not Cash homelessness plan and run for mayor. Randy Brasche is in software marketing and got involved in the issue being frustrated with the condo lottery and [[CORRECTION/DELETION: last year]] forming the San Francisco TIC Coalition.

Board member David Fix is [[CORRECTION/ADDITION: the former]] president of the Small Property Owners of San Francisco, so it's possible that his interest is as much ideological as financial, particularly given his past public statements against rent control. That may also be the case with Baha Hariri, a principal at A&F Properties and the former political director of the downtown-funded-and-created Committee on Jobs.

Among the downtown players that fund Plan C, which was sitting on $73,872 in the bank as of the start of this year, are the Committee on Jobs, the San Francisco Association of Realtors, PG&E, San Francisco Apartment Association, Small Property Owners of San Francisco, Shorenstein Realty, the San Francisco Chamber of Commerce, and venture capitalist Ron Conway.

So Plan C appears to be little more than Plan A's deceptive effort to push Plan Condo. BTW, I've been waiting more than 24 hours now to get a call back from the Plan C board, after leaving a message with its only paid administrator, Richard Magary, who told me Sullivan and his colleagues are all quite busy now. But I'll be happy to update this post if and when I hear back.

2/22 UPDATE: Still no call back from Plan C, but Fix made a comment requesting the two minor corrections above. C'mon, Plan C, gimme a call, what are you so afraid of?

Comments

Some people here hate that, apparently.

Posted by anon on Feb. 23, 2013 @ 12:08 pm

'Yep, RE is booming again'

just a reminder - 5 days until sequestration 'doomsday'.

Posted by Guest on Feb. 24, 2013 @ 11:10 pm

Since DC cleaerly lacks the spine to cut spending, this will do it for them. Yeah, it's indiscriminate, but it's still better than more "borrow, tax and spend".

Sequestration? Bring it on!

Posted by Guest on Feb. 25, 2013 @ 8:16 am

San Francisco. Imagine the numbers in the majority of the US with a depressed housing market.

http://www.trulia.com/for_sale/San_Francisco,CA/foreclosure_lt/

Posted by Eddie on Feb. 23, 2013 @ 12:16 pm

outlying, lower-rent parts of SF? Not many prime addresses there, huh?

As in every RE cycle, prime is the place to be which, in SF, means the northern districts, not tractland.

Posted by anon on Feb. 23, 2013 @ 12:57 pm

"Foreclosures generally do not happen where there is equity..."

You conmen just won't stop.

http://blogs.kqed.org/newsfix/2013/02/22/san-francisco-struggles-with-de...

" ....Denike has lost 40 percent of his equity. And because TICs have adjustable-rate mortgages, his payments have ballooned."

Posted by Guest on Feb. 25, 2013 @ 3:09 pm

Vegas? Maybe. Who cares?

Posted by anon on Feb. 25, 2013 @ 3:24 pm

The Castro. Psycho.

Posted by Guest on Feb. 25, 2013 @ 4:47 pm

Show me a 3-bed home in 94114 for sale for much less than a million, or renting for much less than 4K per annum.

Posted by anon on Feb. 25, 2013 @ 5:03 pm

that anon has both poor reading and math abilities. "4K per annum" translated into English is $4000 per year, or $333.33 per month.

Down with stupidity!!!

Power to the thoughtful!!!

Posted by San Francisco Anti-Stupidity Campaign on Feb. 26, 2013 @ 10:18 pm

Liar loans, pik a pay, securitized mortgage securities and 7 year fractional TIC all originated right here in Calif. There is just something about this state and mortgage fraud and I think it has something to do with unintended consequences of prop 13, some kind of weird bloated market imbalances.

This issue is so loaded in fact that I had several posts censored from the Bay Guardian for the first time ever today.

Posted by Guest on Feb. 23, 2013 @ 10:53 am

In fact, the 7 year TIC fraction is almost the perfect real estate crime that goes way back.

"The Philadelphia Plan and the pure 5-year balloon mortgage both presented the borrower with a lesser monthly obligation, but were predicated upon the assumption of freely available credit with which to refinance the principal at maturity which exposed them to substantial risk of default under an acute financial crisis characterized by tightening credit."

http://en.wikipedia.org/wiki/National_Mortgage_Crisis_of_the_1930s

Posted by Guest on Feb. 23, 2013 @ 11:01 am

from the market as owners refuse to re-rent them and just Airbnb them. As usual progressives are fighting rearguard actions, defensive wars and falling back again and again and again.

When will progressives set the agenda again in San Francisco Steven? Do you consider yourself complicit in the huge decline of progressive power in this city by advocating for failed policies which have resulted in the situation we're in today?

Posted by Lucretia Snapples on Feb. 21, 2013 @ 5:02 pm

1) LL's leave units empty. 10,000 at a recent estimate
2) LL's Ellis
3) LL's form TIC's and, eventually, condo them
4) LL's do OMI's and RMI's
5) LL's do short-term lets to visiting foreigners, academics and business people
6) BnB
7) LL's apply to merge, demolish or substantially rehab buildings

In fact, LL's do almost anything except what RC is supposed to create - cheap rents. Funny that, huh?

Posted by Guest on Feb. 21, 2013 @ 5:10 pm

Thanks for this list, and I'd like to add one: Blatant Harassment by land'lord'/ladies who make life as intolerable as they can to force renters to move, even tho It's against the laws. I wonder what they'd do if given even more power. Nightmares. Related & recent survey by Pew Center: 60% of Republicans do not believe the govt should help people who 'can't help themselves' (quotes mine), compared with 40 % in 1970. That both amazes me and doesn't surprise me at all.

Posted by sue mather on Feb. 22, 2013 @ 5:00 pm

The deck is so stacked against a LL that Ellis is often the only way out, if other methods of persuading tenants to move on with their lives doesn't work.

Posted by Guest on Feb. 22, 2013 @ 5:33 pm

I own a 2bed tic with wife and 2 kids. My message for the ones against tic to
Condo co version is to stop discriminating in people who save money for the 5% down payment. Now I pay 6% percent interest rate if I convert to condo I hope to refinance to about 3%. But I guess mister avicoli and mister gulicson. Sorry my grammar I wasn't born here but my kids are and I love San Francisco too.

Posted by cago na cueca on Feb. 21, 2013 @ 6:23 pm

losers who never made an effort, took a risk, worked hard or saved. So they have no hope of owning a home or ever not renting, so they do not want anyone else to succeed either.

They want SF to be a city full of loser renters, and with tight government control of everything in their desperate attempt to stay in a town that they know they cannot afford.

And yeah, sure, if I could get a cheap rent in Aspen, I would take it. But how is that good for anyone. People like Steven have given up and can only dervie pleasure from seeing others fail. It is so very sad.

Posted by Guest on Feb. 21, 2013 @ 6:37 pm

If by taking a risk you mean falling for a real estate conman you're right, lots of renters saw through that.

Posted by Guest on Feb. 21, 2013 @ 8:00 pm

their investment while you've been handing over rent to your landlord for decades with nothing to show for it.

Posted by anon on Feb. 22, 2013 @ 8:57 am

"I know plenty of TIC'ers who've been making good money on their investment..."

SO strange, all I saw at Land Use were screaming home owners who can't refinance their government 7 year balloon mortgages.

Posted by Guest on Feb. 22, 2013 @ 11:50 am

"I know plenty of TIC'ers
"I know plenty of TIC'ers who've been making good money on their investment..."

Actually don't you mean you know plenty of condo converters who were able to execute the scam before the inevitable backlog choked them off?

Posted by Guest on Feb. 23, 2013 @ 11:04 am

1000% over 30 years. I feel sure you hate all that wealth creation.

Posted by anon on Feb. 25, 2013 @ 5:02 pm

"No, I mean that SF RE is up 300% in 15 years and
1000% over 30 years. I feel sure you hate all that wealth creation."

Because TICs are not for 1%ers.

"Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be ... the majority of large gains are indeed at the top of the distribution."

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

-Income inequality in the United States-

Posted by Guest on Feb. 25, 2013 @ 11:17 pm

If some one wishes to be updated with most up-to-date technologies after that he must be go to see this web page and be up to date all the time.

Posted by Real estate house condo apartment land on Sep. 26, 2013 @ 5:47 am

reasonable rent than a much more expensive mortgage payment for the same apartment even if it is renamed a TIC or condo.

Posted by Eddie on Feb. 21, 2013 @ 8:21 pm

wealth or long-term security, then I suppose you might think that.

but the overwhelming majority of Americans either own (about 65%) or want to own. Clinging to a grim rent-controlled rental and hoping not to get Ellis'ed is not a lifestyle many would freely choose.

Posted by anon on Feb. 22, 2013 @ 8:58 am

Owning a home in SF is very difficult. The supply is tight and it seems there are always people with more money to outbid you. It often takes a major life reorganization to overcome the obstacles.

That said, it is unfortunate when frustrated people take positions which end up making it even more difficult for average people to own property in SF.

Posted by Guest on Feb. 22, 2013 @ 9:53 am

This really shouldn't be about whether homeowners are somehow more virtuous that renters. Even though the vast majority of San Franciscans are renters like me, we don't begrudge our homeowning friends their choices. It's tough to get a good-paying job and save money, so good for them if they can buy a house or a condo. What we object to is when they see our rent-controlled apartments as "affordable home ownership opportunities," rather than simply taking part in the well-established real estate market and paying what it actually costs to own a home in San Francisco. That's cheating their way into homeownership, and it has real impacts on working class San Franciscans and the diversity of this city for generations to come. Apartments aren't houses or condos, and they shouldn't be seen as an "affordable home ownership opportunity" any more than squatting or mobs of angry former renters showing up to take back their old apartments by force is an "affordable home ownership opportunity," even if that label is probably technically true in both cases.

Posted by steven on Feb. 22, 2013 @ 10:41 am

Why should the owner of that property be stuck for decades with a low-rent paying tenant when far more value could be realized as a home that someone else can own?

The fact that the State has passed laws allowing rental apartments to be sold as TIC's and condo's, and allows the Ellis Act specifically for that purpose, indicates that the people and voters of this fine State are comfortable with this situation.

Posted by anon on Feb. 22, 2013 @ 11:10 am

"But why should anyone have an entitlement to a low rent?"

Rent control was a direct response to the passage of prop 13 which instantly inflated housing values by about 20%, and rents along with.

As long as prop 13 exists, safe to say so will rent control, which by the way was voted in by the Board of Supervisors to stop a far more effective rent control law about to pass by ballot measure.

Posted by Guest on Feb. 22, 2013 @ 11:58 am

Tax is what you pay to a government and the American people have long held a distrust to handing over ever more taxes to the government.

Rent is simply what you pay for a product or service and, if you are paying less than it is worth, then someobdy else is taking a loss to fund your sense of entitlement to a home in a city that you clearly cannot afford.

Posted by anon on Feb. 22, 2013 @ 12:19 pm

"Tax is what you pay to a government."

Low interest subsidized loans are what you get from government. At least until March 1.

http://www.allgov.com/news/top-stories/home-mortgage-market-now-controll...

- Home Mortgage Market Now Controlled by U.S. Government -

Posted by Guest on Feb. 22, 2013 @ 12:44 pm

deductibility of mortgage interest. We, the voters, voted for that.

Problem?

Posted by anon on Feb. 22, 2013 @ 1:18 pm

interest ever on the ballot. We the voters consistently vote for rent control.

Solution to your problem. Problem?

Posted by Eddie on Feb. 22, 2013 @ 6:44 pm

and mortage interest deductibility. Nationally.

And at the State level, we voted for Ellis and Costa-Hawkins. And Prop 13.

So it's all good, right?

Posted by Guest on Feb. 22, 2013 @ 7:01 pm

People love Prop 13 in this state.

Posted by Lucretia Snapples on Feb. 22, 2013 @ 7:47 pm

"But why should anyone have an entitlement to a low rent?"

Why should people who can afford $700,000 condos be entitled to low interest rate government mortgages?

Posted by Guest on Feb. 22, 2013 @ 12:01 pm
Posted by anon on Feb. 22, 2013 @ 12:15 pm

"Mortgages rates are not "low". They are at market
Unlike rents."

Not exactly.

The Federal Reserve has an open ended policy of buying 40 billion (with a B) of mortgage backed securities per month (with an M) to manipulate mortgage rates downward. Hardly 'market'.

Which is renter tax money at work thanks to Prop 13.

Posted by Guest on Feb. 22, 2013 @ 2:11 pm

renters are subsidizing anyone.

Mortage rates are set off bond rates, which are set by the market. If you know better than the market, why aren't you rich?

Posted by anon on Feb. 22, 2013 @ 2:36 pm

"Mortage rates are set off bond rates, which are set by the market."

The Federal Reserve started the third round of 'quantitive easing" (!!!!!) in September with a program to purchase 40 billion per month of (toxic) mortgage backed securities (actually invented right here in California in 1990 by William Komperda and Roland Arnall) and in December had to raise that to 85 billion, open ended.

Your market is just another fraud really along with your liar loans and your pick a pay and your fractional TICs.

-Fed Undertakes QE3 With $40 Billion Monthly MBS Purchases-

http://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-
mortgage-securities-each-month.html

The had to shift gears in December to 85 billion per month...

-QE4 Is Here: Bernanke Delivers $85B-A-Month Until Unemployment Falls Below 6.5%-

Posted by Guest on Feb. 23, 2013 @ 6:56 am

"Renters don't pay property tax."

Thanks to prop 13 neither to land holders.

Posted by Guest on Feb. 23, 2013 @ 7:04 am

Wait a sec, I thought that it was an article of faith that all taxes ended up getting paid by people, passed on by business?

Posted by marcos on Feb. 23, 2013 @ 8:07 am

But yes, ultimately only people pay taxes. But it is the propoerty owner who payd the property tax (in some other countries, it is the occupant who pays the property tax, and perhaps you think it is fairer that the person who consumes services should pay for them?)

But indirectly, yes, business taxes have to be passed on to the customer, else the business loses money and goes out of business. As with, say, an Ellis eviction.

Posted by Guest on Feb. 23, 2013 @ 8:37 am

Of course it's the tenants who pay the property tax. No one buys a rental property where the rents don't at least cover the property tax and maintenance expenses, obviously.

What's highly relevant, however, is that the government gives the juicy tax write-off to the landlord even though it's really the tenant paying the tax. The govenrment has always favored property investors and profits over people - especially when the people are lowly, dim-witted tenants.

The government, big landlords, and wealthy bondholders are all part of the same group: their goal is to enrich each other at the expense of tenants, taxpayers, and lower and middle-income working people. The real estate and tax systems are the primary mechanisms for transferring wealth to the favored elites, letting the bottom 90% fend against each other at the great amusement of the favored top 10% and their government enablers.

Posted by Guest on Feb. 23, 2013 @ 9:10 am

The ability to deduct mortgage interest and property tax goes to all property owners regardless of whether they rent it out or not.

So the only tax breaks a LL gets is the ability to deduct actual costs from the profit, which of course is true for all businesses.

In a sense, yes, the tenant pays the tax, but then he or she should. It is the tenant who consumes local services. The LL may not even live in SF and so is not consuming services.

If being a LL in SF were such a profitable thing, then you would not see hundreds of Ellis evictions and TIC conversions. That tells you that being a LL under RC is not as profitable as other inveestments, and therefore LL's want out.

Posted by anon on Feb. 23, 2013 @ 9:22 am

Thanks for the insight. And when that greed doesn't work out, their government changes the rules to bail them out.

That's why I have to buy clothes online because it's the only place I can find union-made ones. Most businesses have out-sourced and off-shored production of most goods, immiserating workers here and increasing the authoritarianism facing workers in the developing world.

Posted by Eddie on Feb. 23, 2013 @ 10:00 am

And a tenant wanting a discounted rent or freedom from ever having to move is being every bit as greedy.

The entitlement is stunning.

Posted by anon on Feb. 23, 2013 @ 10:13 am

We do pay property taxes. They are embedded in our rents. We also pay higher income taxes because we don't have the mortgage interest deduction. And we pay on every dime we make.

These TIC owners would convert be able to sell at a windfall profit and not pay a dime in taxes on the first $250,000. Unearned income -- more protected than actual productivity.

And did you know that real estate owners can collect food stamps without their property values weighing into the equation? That unemployed homeowners can get $50,000 extra paid toward their mortgages? Renters get to pay the taxes that cover this benefit, even as they have to leave apartments they can no longer afford

Oh, and Medicaid gives nursing-home benefits to homeowners that renters cannot receive until they go completely broke.

Posted by Guest on Feb. 23, 2013 @ 3:33 pm