Proposal would halt condo conversions for ten years

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Ted Gullicksen of the San Francisco Tenants Union joined supervisors in unveiling an alternative to controversial legislation.
GUARDIAN PHOTO BY REBECCA BOWE

San Francisco Supervisors Norman Yee, Jane Kim and Board President David Chiu gathered with a cluster of tenant advocates at City Hall April 15 to unveil a proposal billed as a more equitable alternative to a highly controversial condominium conversion legislation that’s fueled a months-long battle over affordable housing.

Crafted with the input of tenant advocates, the new plan seeks to amend controversial legislation proposed earlier this year by Sups. Scott Wiener and Mark Farrell to allow a backlog of approximately 2,000 housing units to convert immediately from jointly held tenancies-in-common (TICs) to condos.

The proposal would effectively shut down the city’s condo conversion lottery for a minimum of 10 years, a measure aimed toward ending the cycle of real estate speculation that tenant advocates say has given rise to a spike in evictions in San Francisco’s supercharged housing market.

The proposal would still allow a current backlog of TICs to convert to condos without having to wait in a lottery system created to limit the number of units lost from the city's rental housing stock. The board’s Land Use and Economic Development Committee, which is currently in session, will take up the legislation and proposed amendments later this afternoon.

The 10-year suspension on condo conversions would allow time for permanently affordable units to be built in place of the rental units that would be lost in the one-time conversion, proponents of the alternative legislation said. “If more affordable housing isn’t produced, then units don’t get to convert,” Housing Rights Committee executive director Sara Shortt told the Guardian. 

Chiu stressed that the proposal was crafted to “ensure that as we expedite condo conversions … we protect tenants by suspending the lottery for at least 10 years.”

The 10-year minimum suspension is based on current regulations capping condo conversions at 200 per year. It would last a decade because an estimated 2,000 units would be converted, but could last longer than that.

“For example, if 2,200 units are converted,” Chiu explained, “the suspension would last for 11 years.”

Meanwhile, the proposal would require the conversions that would be intially allowed to be staggered over the course of three years.

The plan “puts the Board of Supervisors on record that we strongly believe in preserving our affordable housing stock,” said Sup. Yee, adding that the package of amendments seeks to “address the risk of speculation that will ensue with a large number of TICs being converted to condominiums.”

The Wiener-Farrell proposal spurred a months-long opposition campaign led by tenant advocates, who said it would permanently remove affordable rental units from the city’s housing stock and incentivize evictions of long-term tenants at a time when Ellis Act evictions are already on the rise. 

“Condo conversions are the number one reason why people are being evicted from the city,” San Francisco Tenants Union executive director Ted Gullicksen said at the April 15 rally and press conference.

Wiener and Farrell’s proposal was presented as a way to remedy TIC owners’ complaints that onerous shared mortgages had left them financially strapped.

But Sup. David Campos, who also appeared at the rally, commented that the real challenge “is for the renters who are finding it very hard to live in San Francisco.”

Campos seemed dubious that a one-time condo conversion should be allowed to move forward at all. “If anything, I think we should be doing more to protect tenants,” he said. “My hope is … if it’s something we cannot live with as a community, we will make sure it dies,” he added, referring to the original condo conversion proposal. 

In an earlier attempt to strike a compromise between TIC owners and tenant advocates, “negotiations broke down quickly,” Shortt said in an interview. At the rally, she said this alternative was “drafted in a way that's not trying to meet any political agendas.”

For many elderly and low-income tenants who have few options if they are faced with eviction, “there is no price tag that you can put on their units,” said Matt McFarland, a staff attorney at the Tenderloin Housing Clinic, who spoke at the rally. “Their most valuable possession is the long-term rent control on their property. For these tenants, it’s basically a death sentence when you get these eviction notices.”

Comments

What it means for the future is that property owners will have no faith in the lottery/condo pathway and so instead will just Ellis/TIC, take their profit, and run.

While of course 2-unit buildings will continue to bypass the lottery and this legislation anyway.

Not one single unit of affordable housing is created here. All that has happened is that some tenants may have put off their homelessness. Unless of course they get Ellis'ed in response.

If I did not already have a property in the lottery, and hereby get a bypass, I would simply Ellis and TIC. In just 4 months, all my tenants go boom.

Posted by anon on Apr. 15, 2013 @ 4:12 pm

Leave the condo conversion laws alone.

My building is going to be Ellised, and I'm hoping to buy my unit at a considerable discount. The landlord is done supporting a city employed 30+ year tenant, and a Google employed 20+ year tenant.

TIC financing will improve as the market improves.

New owners should be given a chance at the lottery. Do not agree to a 10 year moratorium!

Posted by Guest on Apr. 16, 2013 @ 12:44 pm

except maybe a small one to save the frictional costs. As an owner Ellis'ing a building, I'd want you gone, and then you can bid for your unit in the open market.

I do think, however, that there should be more provision for tenants to buy their units, with LL's giving them say a 10% discount to market as long as no eviction is necessary.

In fact, the market-based solution to ending rent control is simply to sell those units to tenants, or of course buyouts. But as things are, it is more profitable to Ellis and TIC, even tho no condo conversion is then possible.

At some future point, I suspect another deal will be done to allow Ellis'ed buildings to be condo'ed after 10 or so years.

Posted by Guest on Apr. 16, 2013 @ 1:01 pm

I just bought my TIC and I will go to the Condo Lotery in 2 years beased on the current law. It is time to terminate rent control and the rent will go down across the board.

Posted by Persie jackson on Apr. 15, 2013 @ 5:00 pm

down even though some previously controlled tenants saw their rents increase. But the real benefit was that lots of new supply came on stream, both from landlrods who had previously kept units vacant rather than rent them out, to developers and builders who built new units.

Rent Control, like all kinds of price control, actually ends up harming the very constituency it was aimed at helping. In a generation's time, it will be gone in SF, and nobody will remember why anyone ever thought it was a good idea.

Meanwhile, Mister Ellis will always lend a helping hand.

Posted by anon on Apr. 15, 2013 @ 5:22 pm

Time to Bring Rent Control Back to Boston, Cambridge?
In 1994, Massachusetts residents voted 51 percent to 49 percent to do away with rent control in Boston, Cambridge and Brookline. Rents jumped, driving tenants to cheaper digs, but so did housing quality, as landlords were able to make capital improvements with the higher rents in hand. Now, with rents going nowhere but up Hub-wide (even micro-apartments will cost ya), we ask the question:

http://boston.curbed.com/archives/2012/01/time-to-bring-rent-control-bac...

Posted by Guest on Apr. 15, 2013 @ 9:28 pm

pay part of their rent. That doesn't mean it is a good ideas. Kneejerk self-interest is hardly a sound basis for public policy.

Posted by Guest on Apr. 16, 2013 @ 5:31 am

Jan 12, 2012, 12:52pm EST

(Title): Harold Brown fears return of rent control 'nightmare'
Boston Business Journal

Boston’s apartment vacancy rate at 1 percent and rising rents add up to one thing for Hamilton Co. CEO Harold Brown: the prospect of a return to rent control.

The 86-year-old real estate legend, who bought his first building on Commonwealth Avenue in 1954, said the fear of rent control is never far from his thoughts.

“Landlords are starting to increase rents, but be careful, careful, careful, if you raise rents too high you’re going have a backlash that wants rent control to come back,” warned Brown, who spoke to a packed crowd this morning at Boston Multifamily Summit sponsored by BisNow, an online real estate newsletter. “Tenants just aren’t going to pay it. They will go back to their families houses or double up and all these new luxury building which are under construction won’t rent up. There’s just a limited amount of rich people around.”

(Put the title of the article in your search engine to read the rest of the article).

Posted by Guest on Apr. 15, 2013 @ 9:36 pm

And remember that the city of Boston is quite small, being surrounded by other cities like Brookline, Cambridge etc. Many of those cities never had rent control, just like most of the Bay Area does not.

Why don't people just move to places they can afford instead of whining that they cannot afford Madison Avenue?

Posted by Guest on Apr. 16, 2013 @ 5:33 am

that some people would move to Oakland, which is probably where they should have been all along.

Commute time from much of Oakland to downtown SF is less than from the southern and western parts of SF.

It's really a non-issue if you look at the bigger picture and see the Bay Area as one large city, with SF as "downtown" and the rest as suburbs.

Posted by anon on Apr. 16, 2013 @ 6:08 am

Just curious, assuming you were a renter in the past, did you support rent control then? I ask because I've noticed the blatant hypocrisy of many homeowners. They were for rent control when they were renting, but then they became a smug hater of rent control the moment they became a homeowner. Such hypocrisy!

Posted by Guest on Apr. 15, 2013 @ 9:38 pm

Why would you expect that people who own single family homes or condos, which are already exempt from rent control, who had previously supported rent control while a tenant would change their views about larger apartment buildings once they purchased a home?

TIC people, sure, but condo and single family homeowners?

Posted by marcos on Apr. 15, 2013 @ 9:55 pm

The eviction protection provisions of RC remain in place for them, and that is a bad thing if you own one and ever want to rent them out.

But more than that, RC poisons the relationship between LL's and TT's. Under RC, a LL treats his TT's as a pest to be removed, rather than as a customer to be given excellent service.

Go to a city without rent control and LL's fall over themselves to give tenants the best deal. Never under rent control.

Posted by Guest on Apr. 16, 2013 @ 5:36 am

As a lifelong low-income renter who has lived with and without rent control, I can attest that even the most courteous and respectful of landlords ultimately treats their tenants, if not like pests to be removed, then like commodities to be exchanged. In an unrestricted market the law is obsolescence. The larger question is: what does that do to our cities? And, do we really want to live in cities where all but the richest have been pushed to the edges? Inequality breeds well-earned resentment and hostility, which does not lead to the kind of society I want to live in.

Posted by Guest on Apr. 17, 2013 @ 7:48 pm

i too am a lifelong renter with no hope of ever buying my own place, but i am a useful part of society and renters should not be punished (made homeless) just because a greedy landlord decides he wants more more more and gets it by condo converting. yes, the hypocrisy is astounding. what ever happened to live and let live? the trends in the city are frightening and utterly unfair for all those people who USED to live in a fair(er) city and enjoyed being a part of society. a few more condo conversions and bye bye "poor people", hello "young entitled teckies" who moved to the city because it (was) "such a great place". yeah, it was before they moved in and made it an elitist's place.

Posted by Guest on Apr. 25, 2013 @ 9:32 am

Why do you think it is OK for someone else to subsidize your lifestyle.

What makes you so special that we should throw money at you so you do not have to move a few miles away to Oakland, when there are more deserving people who want your home and can actually afford to pay for it?

Posted by Guest on Apr. 25, 2013 @ 9:49 am

The true subsidy is to the landlord, through the tax codes and we all pay for that. Rent control is making up for poor tax policy and making a first stab at balancing that equation.

Posted by marcos on Apr. 25, 2013 @ 10:07 am

Tenant pays rent, landlord accepts rent. Bitter hateful classist internet commenter isn't paying anything.

Posted by Guest on Apr. 25, 2013 @ 10:11 am

It's not hypocrisy to realize that being a longterm renter is an extremely poor life decision. It was very difficult to finally tear myself away from my rent control hovel, actually. I still can't believe that bathroom and kitchen! YUCK.

Posted by Guest on Apr. 15, 2013 @ 10:23 pm

Wow, your comment is hilarious. It's also very classist. Classism is not something to be proud of and boast about because it's no different than ageism or other negative "isms."

I work as a contractor and in the homes I've worked in I have seen countless examples of a "yuck" bathroom and kitchen. So "yuck" is not limited to rental units by any means I can assure you of that.

If renters are required to pay more by gutting rent control, then homeowners should also be required to pay more and their fair share for a change by gutting Proposition 13.

Posted by Guest on Apr. 16, 2013 @ 2:07 am

remodel a bathroom or kitchen. In fact, the smartest thing to do with a rental is to do the absolute minimum of repairs - only fix things that are dangerous.

The worse the hovel, the more probably the tenant will leave. Then, and only then, does the LL remodel the place, to get the highest rent possible.

Rent control ensures that tenants will live in ratholes.

Posted by Guest on Apr. 16, 2013 @ 5:38 am

Rent control should be means tested. The system should be anchored in helping people in need, not subsidizing the able-bodied.

Posted by Guest on Apr. 16, 2013 @ 10:07 am

There are cases of tenants on six-figure incomes enjoying a rent subsidy from an elderly landlord with far less means. Some of these tenants even buy a Lake Tahoe ski cabin while keeping their subsidized SF flat as a pied a terre.

It's wrong and unjust.

Posted by anon on Apr. 16, 2013 @ 10:34 am

20% per annum, as they have for the last couple of years, and not being able to participate in that inflation until and unless I get rid of my tenants.

Landlords and tenants should be left free to negotiate whatever deal they wish for, without a nanny state interfering with that.

Failing that, an Ellis eviction is the only sane choice for a landlord. This "agreement" will lead to more Ellis evictions if the path to condo conversion is now seen as being harder for every owner except those lucky enough to get this bypass.

Posted by Guest on Apr. 16, 2013 @ 11:54 am

I bet it is beyond annoying! But you know that deal when you signed up for it. Now quit yer whining and count yer blessings.

Posted by marcos on Apr. 16, 2013 @ 12:09 pm

rent control constantly changes.

By that same argument, tenants "knew the deal" about Ellis evictions when they rented, so they should not complain about them, right?

Posted by Guest on Apr. 16, 2013 @ 12:18 pm

LL are running a business and part of the cost of doing business is being apprised of the legal climate in which the business is to operate. Tenants are not running a business and thus don't generally inform themselves of their legal rights until the LL begins to mess with them because they've allowed themselves to get into a business situation that, to quote "is beyond annoying."

Posted by marcos on Apr. 16, 2013 @ 12:42 pm

dumb as, say, a homeowner who buys a condo next to a bunch of bars and then complains about the noise.

If you rent in SF then you know the LL will want to get you out after a few years unless you offer to pay a market rent.

Posted by Guest on Apr. 16, 2013 @ 12:55 pm

There are few things sadder than a fifty-something renter living in the same place he moved into as a student, and that hasn't been remodeled since.

Posted by anon on Apr. 16, 2013 @ 6:42 am

I bet you feel very embarrassed for them, even ashamed on their behalf.

Posted by marcos on Apr. 16, 2013 @ 7:26 am

would continue to squat in a run down hovel just to hold onto a handout from their landlord. There is precious little dignity in that, as you appear to understand.

After all, even you jumped off the squatting bandwagon, albeit not until middle-aged.

Posted by anon on Apr. 16, 2013 @ 9:56 am

It's only because of SF's backward-ass laws that they can even get anything when the landlord decides they're tired of the game and wants to stop renting. Try going to a bank, ANY bank or credit union, and asking for a line of credit on your rent controlled-hovel and see what they say.

I hope these "payouts" are taxed as income or capital gains and the IRS and the California Board of Revenue are cross-referencing any Ellis Act evictions involving payouts to tenants with those tenant's tax forms. It's not "free money", which those who don't work often view cash as. Believe me in any real estate deal every penny is tracked from seller and buyer and reported to the taxing authorities - I sure hope it's the same for our merry little band of tenant activists.

Posted by Lucretia Snapples on Apr. 16, 2013 @ 12:30 pm

tenant and send a copy to the IRS. Likewise for any lawsuit damages.

But yes, it's ridiculous that entitlement to a handout should be deemed an asset.

Posted by Guest on Apr. 16, 2013 @ 12:52 pm

That run down hovel is worth the better part of a million, ageist fuckface.

Posted by marcos on Apr. 16, 2013 @ 12:44 pm

average price of a 2BR condo in the Mission. A TIC there is maybe 450K or so.

Your equity will be far less, of course, because of any mortgage.

Interestingly, I had one tenant for 15 years and, even under rent control, the amount of rent he paid me over 15 years exceeded what I had paid for the unit, which is now worth three times what I paid.

Renters take no risks and so enjoy none of that. They just hope they won't get evicted. No life at all.

Posted by Guest on Apr. 16, 2013 @ 12:58 pm

and paying rent frozen at 1985 levels is not the owner and is not entitled to a share of that equity. Tenancy does not equal ownership. That's the fundamental disagreement between yourself and everyone else arguing over this issue.

Now I know your business acumen enabled you to claim a fat payout when you were evicted, which has enabled you to join the landowning class and for that - I congratulate you. But your case is unique and not applicable to other evictions particularly those for cause.

Posted by Lucretia Snapples on Apr. 16, 2013 @ 1:11 pm

windfall, but it would really worry me if I needed luck to prosper. I prefer not leaving such things to chance.

Posted by Guest on Apr. 16, 2013 @ 1:56 pm

...as they laugh all the way to the bank! Like the retired SF city employee I know living on an 80k annual pension who owns out of state rental property & is (happily) negotiating a 6 figure buyout with the new owners of the apt he's lived in since the 70s. He's a smart guy.

Posted by Guest on Apr. 16, 2013 @ 12:16 pm

Housing subsidies should be for the poor and homeless, and not for chancers and speculators.

Posted by Guest on Apr. 16, 2013 @ 12:19 pm

This is beautiful... but the best part about the current rental laws is how successful they have been at maintaining affordability.

Posted by Guest on Apr. 16, 2013 @ 1:01 pm

arriving in SF, who sees 1BR flats for 3K a month.

All rent control does is reward middle-aged mostly white under-achievers for squatting on their unit for a couple of decades.

So it's a good deal if you like class and age warfare, and for those with no ambition except to live in a town that they cannot really afford.

But why should the world's favorite city be "affordable"? Go live in Oakland.

Posted by Guest on Apr. 16, 2013 @ 1:06 pm

San Francisco is not the world's favorite city.

Posted by marcos on Apr. 16, 2013 @ 4:47 pm

In fact, SF is a third-rate, small, provincial city.

Which begs the question why some people are so anxious to preserve it as is rather than develop it into something that might at least be second-rate?

Posted by Guest on Apr. 16, 2013 @ 4:57 pm

Unless there is a ballot measure that memorializes this deal and it passes, then any subsequent board of supervisors can just pass a new ordinance blowing through this one. At the rate that the progressives are increasingly unable to contest and win elections, that board is coming up at us faster than 10 years.

Posted by marcos on Apr. 15, 2013 @ 5:21 pm

So what?

Or they could ban forever any condo conversions.

Your point is ridiculous since it applies to any law that is passed. By your argument, there is no point in passing any law because it might change in the future.

Posted by anon on Apr. 15, 2013 @ 5:51 pm

RC has a much broader base then TIC-condo conversions so there would be a much higher political cost to repealing RC. Until progressives get back in the business of winning elections, or until progressives and labor get out of the way of San Franciscans contesting and winning elections, these concessions will become more and more prevalent.

Posted by marcos on Apr. 15, 2013 @ 5:57 pm

It just means that some units that were going condo anyway will go condo sooner, but those are not rented out anyway so it makes no difference.

We just condo 2,000 buildings once every 10 years instead of 200 each year. No real difference.

Posted by Guest on Apr. 16, 2013 @ 5:40 am

Rent control was passed by the voters and can only be undone by the voters.

Posted by Guest on Apr. 15, 2013 @ 6:00 pm

No, that's not true. Rent control was passed by the voters and only voters can end it. No Board can do that. Your argument doesn't hold up.

Posted by CitiReport on Apr. 15, 2013 @ 9:56 pm

rent control because it results in very few vacancies and high initial rents. Many more buy new condo's and see no relevance in RC anyway.

Thousands of RC units vanish each year, for a vareity of reasons, and no new ones are being built. RC will fade away.

Posted by Guest on Apr. 16, 2013 @ 5:42 am

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