Editor's notes

Sorry we're not sorry, TIC owners -- the law applies to you, too

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tredmond@sfbg.com

EDITORS NOTES People who rent apartments aren't second-class citizens. In fact, under San Francisco laws, they have (and ought to have) many of the same rights as the landed gentry.

If you rent a place in this city, and you pay the rent on time, and abide by the terms of the lease, you should be able to stay in your home (and yes, it IS your home) as long as you want. The rent can only go up by a modest amount every year.

Landlords know that when they enter into rental agreements. Accepting a tenant means acknowledging that the person may want to say in his or her apartment for years, maybe for life; the rent the landlord sets for that unit has to be adequate to cover a share of the mortgage, expected maintenance costs, and a reasonable return on the owner's investment.

When you buy a piece of rental property in the city, you are told that tenants live there; you're told what rent they pay, you're informed that you can't raise it much, and unless your utterly ignorant of local law, you realize that the tenants have, in effect, lifetime leases since you can only evict them for "just cause" — which does not include your desire to make more money.

If the numbers don't pencil out under those conditions, they you shouldn't buy the place.

That's how a sane rental housing system ought to operate. Unfortunately, the state Legislature has undermined local rent-control laws with the Ellis Act, which allows landlords to evict all their tenants, cease renting altogether, and turn the place into condominiums. Or, since there are limits on condo conversions in this city, into tenancies in common, which are not limited at all.

Sup. Scott Wiener wants to make it easier to turn TICs into condos; he says the poor TIC owners are having a tough time and can get better mortgage rates if they rules are changed. I don't feel bad for them; they knew the rules when they bought their TICs. They have no right to convert to condos; that's a privilege granted to a limited number each year, by waiting list and lottery. Buy a TIC? You should assume it will remain your ownership model for a long, long time.

The city can't stop the TIC conversions, but it can set ground rules — for example, local law mandates a payment to tenants who are evicted, which can reach $5,000. Sounds big — but it won't even pay two months' rent on a new place in this market.

SO let's be fair here: If you want to evict a tenant, who has and ought to have the right to a stable place to live, you should pay enough to make that person whole. Calculate market rent on a similar place; subtract the current rent the tenant is paying, and cover the difference — for, let's say, five years.

If that makes TICs too expensive, and thus lowers property values by making evictions difficult and keeping rents low, fine: Property values are too high in this town anyway. And if it means more stability for lower-income people at the expense of property owners ... well, I can live with that.

Comments

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Posted by Www.Carloans-123.com on May. 18, 2013 @ 8:05 am

can afford and will continue to afford to live in San Francisco under the existing rules, which most knew about when they moved into their apartments.

Likewise, TIC owners should have known the rules when they bought into their shared ownership properties. Instead, they are seeking an entitlement from the city, which will set a precedent for future changes to the condo conversion lottery system, creating incentives to convert rent-controlled apartments into TICs.

In this case, TIC owners, not rent-controlled tenants, are the ones who are whining.

Posted by Eddie on Feb. 09, 2013 @ 9:10 am

could be Ellis'ed at any time. So, by your argument, they should not whine when that happens. Right?

Posted by Guest on Feb. 09, 2013 @ 9:51 am

It doesn't matter what happened in the past. The past is irrelevant. What's important is that SF rental housing units are worth far more as TICs and condos.

There are thousands of potential speculators who are willing to try to make easy money converting rental apartments to TICs and condos. If the city or state tries to enact reasonable regulations to prevent this or to slow down the process, there will be lawsuits filed saying that the regulations are an unconstitutional taking. The specualtors are likely to prevail since the laws and courts are set up to benefit the wealthy over the poor and powerless.

It's a brutal economic war of speculators verses tenants. Most politiicans would prefer not to get in the middle of it other than spouting a few platititudes such as, "it breaks my heart to see TIC owners and tenants fighting one another." Right.

Posted by Guest on Feb. 09, 2013 @ 12:08 pm

And, indeed, the very use of the word "speculators" there is emotive and disingenuous.

What we have are some gross distortions in the rental market due to highly invasive local policies. Seeing that, the State legislature passed a law allowing any LL to Ellis and sell the building, thereby ensuring that the distortion does not become too unfair.

The Ellis Act does nothing more than put a statutory veneer on what was already a constitutional imperative i.e. that the government cannot "take" from a property owner.

Posted by anon on Feb. 09, 2013 @ 12:17 pm

The "highly invasive local policies" were enacted precisely because of rampant real estate speculation and exorbinant rent increases in the '60s and '70's. You should have been around then and you'd know a lot more about the city's history, although it wouldn't matter since you always distort reality to make your same condescending points anyway.

I think we're all foolish to respond to any of your posts since the viewpoints are pervasive in the halls of business and well-known by all. I've worked with many people like yourself who have made far more money from SF real estate speculation, primarily turning 2-4 unit buildings into condos and TICs, than they've made at their already oversized salaries. And they all seem to have the same degrading attitude towards San Francisco tenants (or the tenants in London, Brussels, Prague and Moscow, where I also met many real estate exploiters.) The local residents live in valuable downtown real estate but pay less than the current going price so they need to go. Who cares about their local churches, or their families, schools, friends, or work relationships. You increase your wealth on the displacement, nice and clean, and they move on.

Posted by Guest on Feb. 09, 2013 @ 6:41 pm

IBGYBG.

Posted by marcos on Feb. 09, 2013 @ 6:56 pm

and interest rates. Now we have very low inflation and interest rates so the situation was completely different.

The development of land into more highly-valued use is a hallmark of any advanced society, and the vast majority of people deem that as being in the public interest, which is why pro-growth politicans always win elections in the US, and even in SF.

Rent Control is a throwback to the times of very high inflation (and in NYC, to WW2). It is gradually eroding as no new RC units are being built, and thousands vanish every year. I suspect in a few years it will be repealed, or rendered moot at the State level, as it clearly acts in the interests of a few lifers and squatters, and against the interests of the majority.

Posted by anon on Feb. 10, 2013 @ 8:40 am

I mean that's a taking if rent control is

Posted by Guest on Feb. 26, 2013 @ 4:30 pm

while rent control affects existing enterprises.

Big difference, and only the latter is a "taking".

What zoning laws do is restrict new build which drives up housing costs for everyone.

Posted by Guest on Feb. 26, 2013 @ 4:44 pm

I already think rent control is unconstitutional taking.

Posted by Guest on Feb. 09, 2013 @ 6:57 pm

I already think rent control is unconstitutional taking.

Posted by Guest on Feb. 09, 2013 @ 6:57 pm

a "taking". Somewhere in the text you will find a statement (always overlooked here) that a LL is entitled to a decent ROI. But for that, RC would be ruled unconstitutional and, indeed, some changes to RC have been rejected by the courts for exactly that reason.

This is why, for instance, LL's can passthru additional expenses to the TT via a petition at the RB. But for that, it would be a taking. Smart LL's passthru everything which, typically, can give you higher increases in rent than the allowable amounts.

Posted by anon on Feb. 10, 2013 @ 8:42 am

There were no framers of RC. Voters had threatened to go to the ballot with strong rent control and then Fineswine swooped in from the right and imposed the system we have today, a right wing undercutting of what the people wanted.

Funny, had Fineswine not preempted and the voters approved strong rent control, that would probably have been thrown out by the courts as the judiciary has lurched libertarian-ward.

Posted by marcos on Feb. 10, 2013 @ 8:52 am

as a "taking", just as some amendments to RC have been. Politics is the art of the compromize, which is why you're a non-achieving "activist" rather than someone who gets thigns done.

RC was a historical accident due to the very high inflation of the 1970's. It has little applicability in the 2000's except to enable whiney wannabees to live somewhere they have no reasonable expectation of deserving.

RC rewards people who cling to their rental ratholes, and punishes those with ambition.

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

So Fineswine's vigor to "get out in front of it" was an example of un-zen politics. All she had to do was to let rent control advocates hang themselves on their own overreach and there would not have been rent control for decades. But, no....you all have nobody to blame but yourselves for this.

Posted by marcos on Feb. 10, 2013 @ 9:18 am

of voters to understand the more subtle arguments that rent control actually harms them. Most people don't think it thru.

But Mr Ellis has fixed the erro of Ms Feinstein and, in the grand cheme of things, it will not have made much difference to SF as it goes onward and upward despite such misguided attempts at social engineering and class warfare.

Posted by anon on Feb. 10, 2013 @ 9:33 am

They just don't buy your crap that rent control hurts tenants.

Social engineering and class warfare. Is that the best you have?

Brain dead troll.

Posted by Eddie on Feb. 10, 2013 @ 9:56 am
Posted by anon on Feb. 10, 2013 @ 10:29 am

Climate change has been accelerating over that same three decade interval, I think that rents correlate directly to increase temperatures.

QED.

Posted by marcos on Feb. 10, 2013 @ 10:34 am
Posted by anon on Feb. 10, 2013 @ 12:33 pm

Argument by the waving of the hands is still argument by the waving of the hands.

Posted by marcos on Feb. 10, 2013 @ 1:17 pm
Posted by anon on Feb. 10, 2013 @ 1:29 pm

Had a childhood friend who would always swipe all of the pieces off of the table when he was losing a board game too.

Posted by marcos on Feb. 10, 2013 @ 1:42 pm

Please, continue and explain to us how stupid the voters who did not understand Ed Lie's bait and switch are?

Posted by marcos on Feb. 10, 2013 @ 10:09 am

Because the runoff was about 60-40 Lee over Avalos.

Posted by anon on Feb. 10, 2013 @ 12:32 pm

No, you are: " I don't blame anyone for rent control other than the inability of voters to understand the more subtle arguments that rent control actually harms them. Most people don't think it thru."

Posted by marcos on Feb. 10, 2013 @ 1:16 pm

to emloy forceful action when a Zen approach would actually be more effective.

This is a weakness to exploit.

Take the real-estate interests' meddling in the D1 race with their "Mar is from Mars" ad as an example: such reactionary over-dick tripping is to be encouraged. Might we profitably consider ways for them to become baited into it?

Posted by lillipublicans on Feb. 10, 2013 @ 9:53 am

Everyone's at risk of falling victim to their own hubris.

Posted by marcos on Feb. 10, 2013 @ 10:20 am

opaque, obfuscated horsecrap here 24/7.

At least Eddie and Greg try to be logical and articulate in their hopelessly liberal pontifications.

Posted by anon on Feb. 10, 2013 @ 10:33 am

I am not a liberal.

Posted by Eddie on Feb. 10, 2013 @ 10:46 am

If you want to quibble about whether, within that categorization, you're a Marxist-Leninist or a Leninist-Marxist, I'll let you debate that with someone who gives a crap.

Posted by anon on Feb. 10, 2013 @ 12:31 pm

marcos seems to think I claimed that I claim only reactionaries are susceptible to overreach. A simple re-reading of my comment will reveal that marcos is wrong when he attempts to point out my error. As usual. What's up with that marcos?

Posted by lillipublicans on Feb. 10, 2013 @ 10:37 am

Nah, illi, you going paranoid again, inferring that for which there was no implied basis.

Posted by marcos on Feb. 10, 2013 @ 11:07 am

and when he says "paranoid," he means pointing to his occasional nattering.

marcos, please try to keep it positive. It might be you are putting too much pressure on yourself here.

Posted by lillipublicans on Feb. 10, 2013 @ 9:44 pm

You remind me of Brian of Nazareth singing "always look on the bright side of life" as respects the impending crucifixion of progressives and neighborhoods of San Francisco politics on the altar of corporate dominance.

Posted by marcos on Feb. 11, 2013 @ 7:42 am
Posted by lillipublicans on Feb. 11, 2013 @ 8:47 am

Because there is no reason to be cynical given the highly successful and effective machinations of "the left" over my lifetime?

Posted by marcos on Feb. 11, 2013 @ 9:20 am

race? Oh, wait, he lost 60-40.

How about Walker in D6? The old crow was squashed.

David in D5? oops again.

Lee stood for mayor on a pro-growth, pro-development platform. Avalos stodd for the opposite. The voters overwhelmingly backed Lee. The voters want market-rate new build, not fossilized, unrenovated 100 year old rental shitholes with ageing losers squatting in them.

Posted by anon on Feb. 10, 2013 @ 10:31 am

You think that the voters are idiots.

Posted by marcos on Feb. 10, 2013 @ 11:08 am

huge majority.

But the average voters does not understand more subtle arguments, such as how something that purports to lower rents actually causes them to be higher.

The result? A wave of Ellis Act evictions. Well done.

Posted by anon on Feb. 10, 2013 @ 12:30 pm

If they can't afford to meet the terms of their contacts, they should sell to people who can, not ask government to give them a windfall profit they have no right to expect

Posted by Guest on Feb. 26, 2013 @ 4:27 pm

So were they worthy citizens when they rented but suddenly become the anti-christ because they took a risk on home ownership?

You will not be harmed if every TIC in SF became a condo tomorrow.

Posted by Guest on Feb. 26, 2013 @ 4:39 pm

Saying a renter deserves a lifetime lease is just as ridiculous as saying any landlord has a life time tenant and you can never move out till you die. If you do move out you owe the landlord a lot of money for his trouble to find a new tenant.. Both positions are equally obscenely ridiculous.

Posted by Guest on Feb. 09, 2013 @ 6:54 pm

shitty basement flat in their 20's and still cling to their hovel in their 50's, seeing that as some kind of weird "right".

Then they wonder why they get Ellis'ed.

Posted by anon on Feb. 10, 2013 @ 8:35 am

Rent control is a special benefit San Francisco provides to over-educated, under-employed, aging, white people.

In other words, the SFBG core readership, which is why the SFBG cares so much about it.

If the benefit was going mostly to recent Chinese immigrants, the SFBG would barely notice.

Posted by Demented, Yet Terribly, Terribly, Persistent on Feb. 11, 2013 @ 3:04 am

1) The existing LL who just gets sick of the low returns, the hassle and the rules and regs. Ellis the building, sell it and get out of the business. This is the type of property owner that the Ellis Act was devised to give relief to.

2) Someone who buys a rental building, Ellis evicts the tenants, then remodels the units and sells them as TIC's. Although the Ellis act was designed to help this type of RE speculator, the result is upgraded units and homeownership opportunities for middle-class working SF'ers, who are often tenants themselves

3) Something I have seen more recently. A speculator buys the building, Ellis evicts the tenants, and then immediately sells the shell of the building without doing anything else. The building is effectively "flipped" within 6 months of it's purchase.

To my mind, only case 3 is the undesirable one here. There could perhaps be some restriction on selling a building within a year of an Ellis, altho I'm not sure whether that would be constitutional.

Posted by Guest on Feb. 11, 2013 @ 7:40 am