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SAN FRANCISCO
Board to consider TIC-condo proposal
Plan pits renters against owners in sky-high market
- Rachel Gordon, Chronicle Staff Writer
Sunday, April 3, 2005
San Francisco got into the business of capping the number of apartments that can be turned into condominiums more than two decades ago in an effort to preserve affordable rental housing in one of the hottest real estate markets in the world.
The regulation started a tug-of-war over the city's political and socioeconomic identity that is still playing out today.
On one side of the battle over condominium conversions are those advocating for changes in the law to allow for an expansion of homeownership and the financial benefits it creates for those hoping for a piece of the American dream.
On the other side are those who fear such an expansion would erode the city's stock of affordable rent-controlled housing and come at the expense of the city's middle and lower classes made up of cafe workers, artists, maids and the working poor.
The debate is about economics, social engineering, political power and culture -- a fight, as one elected official put it, for the very soul of the city.
This week, both sides are digging in their heels again over a proposal headed to the Board of Supervisors on Tuesday that would benefit a select group of people who own tenancies in common -- a real estate transaction popular with first-time homebuyers in which a group of people own a residential building collectively and share a mortgage while occupying separate units.
The proposal would allow these property owners to turn their tenancies in common, or TICs, as they're commonly known, into condominiums. Condos, which are individually owned, are worth more on the open market and are considered a more financially stable investment.
Under current law, TIC owners are covered by the same city cap that limits the number of apartment-to-condo conversions at 200 a year. The limit, enacted 23 years ago, is intended to preserve the stock of rent-controlled apartments. A total of 1,512 units were entered in this year's condo- conversion lottery.
If the new proposal is approved, owners of certain TICs could sidestep the competitive condo-conversion lottery, for what is supposed to be a one- time-only deal. City officials know of at least 374 units that would be eligible under the proposed guidelines.
By itself, the plan would not take any rentals off the market because the TICs already are in the ownership stock.
But critics speculate the one-time chance to bypass the lottery would be repeated , and, as Supervisor Jake McGoldrick said, "open the floodgates.'' Backers of the proposal dispute that assertion.
The stakes are potentially high in San Francisco, where nearly two-thirds of the residents rent -- the flip side of the national norm.
Shifting the balance could very well, over time, result in a change of the city's political landscape.
"I think there's a different mind-set of homeowners, and that tends to be more conservative. In San Francisco, that means pushing people more toward the center,'' said Tommi Avicolli Mecca, a tenant activist intent on preserving the rental stock and the city's liberal status quo.
"I'm not against homeownership,'' he said. "I just want to make sure that we preserve the rent-controlled stock so we can continue to be a city of refuge for queers and immigrants and working-class families.''
What eventually could be at risk, he said, are rent control, election of supervisors by district rather than citywide, and other policies that are at the heart of San Francisco's liberal progressive agenda.
Ryan Chamberlain, field director for San Francisco SOS, a group promoting more conservative policies, agreed that the political balance would shift. Homeowners, who have a financial stake, tend to be more rooted in their community, whereas renters tend to be more transient, he said.
"I think that would be an unavoidable political outcome because you'd have more stakeholders in the city. When it comes to public policy, it should be more swayed toward the stakeholders,'' said Chamberlain, whose group has pushed a centrist agenda in such areas as taxation, school policies and enforcement of anti-nuisance laws.
Supervisor Michela Alioto-Pier, who is co-sponsoring TIC legislation with Supervisor Bevan Dufty, said the measure is designed to protect the middle class -- teachers and social workers -- who want to own but can't afford to buy a single-family home. She pointed to the housing crisis as a factor in the exodus of young families from the city.
By helping these people convert their properties to more financially secure condominiums without the uncertainty of the lottery, she argued, they are less likely to leave San Francisco for places where homeownership is more affordable.
But Sister Bernie Galvin, a Catholic nun who works with the homeless and poor, said homeownership unfortunately has resulted in the displacement of tenants who can't afford to buy. The reality in San Francisco, she and others say, is that new construction hasn't kept up with the demand for housing, and that even when new housing is built, TICs and condos in older buildings are often less expensive.
That has resulted in a surge of landlords using a state law, the Ellis Act, to take hundreds of units -- many regulated by rent control that limits rent hikes on occupied apartments -- off the market and selling them as TICs. If the units become condos and are rented out again, they are not subject to rent control.
"It will continue the longtime trend of San Francisco becoming a city for the wealthy,'' Galvin said of the proposal.
That notion frustrates Randy Brasche, president of the San Francisco TIC Coalition, a group formed last year to promote the interests of people who own TICs and those who want to buy them.
A software marketer who lives in a four-unit building he bought with others two years ago in the Glen Park neighborhood, Brasche said the legislation is a moderate proposal that will help first-time homebuyers build equity and a more secure financial future.
Both sides have been rolling out people at City Hall this past week to put a human face on the struggle -- current and hopeful homeowners and tenants who have been displaced.
"It's sort of become a beast that has outgrown us,'' Brasche said of the legislative proposal. "It basically underscores the housing problem in San Francisco.''
As the Board of Supervisors is set Tuesday to consider the measure, which has the backing of Mayor Gavin Newsom, two other proposals considered even more polarizing are in the pipeline.
Supervisor Chris Daly, backed by the San Francisco Tenants Union, has called for a three-year moratorium on all condo conversions. Supervisor Sean Elsbernd, supported by real estate interests, is looking to expand the annual number of allowable conversions to 800 to 1,500 for each of the next five years.
Board of Supervisors President Aaron Peskin doesn't see the fight going away any time soon, at least as long as the clamor for homeownership bumps up against the prospect of decreasing the number of rent-controlled dwellings.
"At the end of the day,'' Peskin said, "it's a fight for the soul of the city -- what the city is going to look like and how it's going to vote.''
Condo conversion plan
The proposed ordinance would provide eligible owners of tenancy in common buildings, or TICs, a one-time exemption from San Francisco's condominium conversion lottery.
Participation would be restricted to TIC buildings with no more than six units. The buildings must be 100 percent owner-occupied, and those owners must have lived in them on Jan. 20. Buildings in which the owners displaced senior, disabled or catastrophically ill tenants after Nov. 16, 2004, wouldn't be considered for the exemption. City officials know of at least 374 units that would be eligible.
There are 330,000 dwellings in San Francisco, 65 percent of them rentals. The yearly cap on condo conversions is set at 200.
E-mail Rachel Gordon at rgordon@sfchronicle.com.
Page A - 21
URL: sfgate.com/cgi-bin/article.cgi
©2005 San Francisco Chronicle
Board to consider TIC-condo proposal
Plan pits renters against owners in sky-high market
- Rachel Gordon, Chronicle Staff Writer
Sunday, April 3, 2005
San Francisco got into the business of capping the number of apartments that can be turned into condominiums more than two decades ago in an effort to preserve affordable rental housing in one of the hottest real estate markets in the world.
The regulation started a tug-of-war over the city's political and socioeconomic identity that is still playing out today.
On one side of the battle over condominium conversions are those advocating for changes in the law to allow for an expansion of homeownership and the financial benefits it creates for those hoping for a piece of the American dream.
On the other side are those who fear such an expansion would erode the city's stock of affordable rent-controlled housing and come at the expense of the city's middle and lower classes made up of cafe workers, artists, maids and the working poor.
The debate is about economics, social engineering, political power and culture -- a fight, as one elected official put it, for the very soul of the city.
This week, both sides are digging in their heels again over a proposal headed to the Board of Supervisors on Tuesday that would benefit a select group of people who own tenancies in common -- a real estate transaction popular with first-time homebuyers in which a group of people own a residential building collectively and share a mortgage while occupying separate units.
The proposal would allow these property owners to turn their tenancies in common, or TICs, as they're commonly known, into condominiums. Condos, which are individually owned, are worth more on the open market and are considered a more financially stable investment.
Under current law, TIC owners are covered by the same city cap that limits the number of apartment-to-condo conversions at 200 a year. The limit, enacted 23 years ago, is intended to preserve the stock of rent-controlled apartments. A total of 1,512 units were entered in this year's condo- conversion lottery.
If the new proposal is approved, owners of certain TICs could sidestep the competitive condo-conversion lottery, for what is supposed to be a one- time-only deal. City officials know of at least 374 units that would be eligible under the proposed guidelines.
By itself, the plan would not take any rentals off the market because the TICs already are in the ownership stock.
But critics speculate the one-time chance to bypass the lottery would be repeated , and, as Supervisor Jake McGoldrick said, "open the floodgates.'' Backers of the proposal dispute that assertion.
The stakes are potentially high in San Francisco, where nearly two-thirds of the residents rent -- the flip side of the national norm.
Shifting the balance could very well, over time, result in a change of the city's political landscape.
"I think there's a different mind-set of homeowners, and that tends to be more conservative. In San Francisco, that means pushing people more toward the center,'' said Tommi Avicolli Mecca, a tenant activist intent on preserving the rental stock and the city's liberal status quo.
"I'm not against homeownership,'' he said. "I just want to make sure that we preserve the rent-controlled stock so we can continue to be a city of refuge for queers and immigrants and working-class families.''
What eventually could be at risk, he said, are rent control, election of supervisors by district rather than citywide, and other policies that are at the heart of San Francisco's liberal progressive agenda.
Ryan Chamberlain, field director for San Francisco SOS, a group promoting more conservative policies, agreed that the political balance would shift. Homeowners, who have a financial stake, tend to be more rooted in their community, whereas renters tend to be more transient, he said.
"I think that would be an unavoidable political outcome because you'd have more stakeholders in the city. When it comes to public policy, it should be more swayed toward the stakeholders,'' said Chamberlain, whose group has pushed a centrist agenda in such areas as taxation, school policies and enforcement of anti-nuisance laws.
Supervisor Michela Alioto-Pier, who is co-sponsoring TIC legislation with Supervisor Bevan Dufty, said the measure is designed to protect the middle class -- teachers and social workers -- who want to own but can't afford to buy a single-family home. She pointed to the housing crisis as a factor in the exodus of young families from the city.
By helping these people convert their properties to more financially secure condominiums without the uncertainty of the lottery, she argued, they are less likely to leave San Francisco for places where homeownership is more affordable.
But Sister Bernie Galvin, a Catholic nun who works with the homeless and poor, said homeownership unfortunately has resulted in the displacement of tenants who can't afford to buy. The reality in San Francisco, she and others say, is that new construction hasn't kept up with the demand for housing, and that even when new housing is built, TICs and condos in older buildings are often less expensive.
That has resulted in a surge of landlords using a state law, the Ellis Act, to take hundreds of units -- many regulated by rent control that limits rent hikes on occupied apartments -- off the market and selling them as TICs. If the units become condos and are rented out again, they are not subject to rent control.
"It will continue the longtime trend of San Francisco becoming a city for the wealthy,'' Galvin said of the proposal.
That notion frustrates Randy Brasche, president of the San Francisco TIC Coalition, a group formed last year to promote the interests of people who own TICs and those who want to buy them.
A software marketer who lives in a four-unit building he bought with others two years ago in the Glen Park neighborhood, Brasche said the legislation is a moderate proposal that will help first-time homebuyers build equity and a more secure financial future.
Both sides have been rolling out people at City Hall this past week to put a human face on the struggle -- current and hopeful homeowners and tenants who have been displaced.
"It's sort of become a beast that has outgrown us,'' Brasche said of the legislative proposal. "It basically underscores the housing problem in San Francisco.''
As the Board of Supervisors is set Tuesday to consider the measure, which has the backing of Mayor Gavin Newsom, two other proposals considered even more polarizing are in the pipeline.
Supervisor Chris Daly, backed by the San Francisco Tenants Union, has called for a three-year moratorium on all condo conversions. Supervisor Sean Elsbernd, supported by real estate interests, is looking to expand the annual number of allowable conversions to 800 to 1,500 for each of the next five years.
Board of Supervisors President Aaron Peskin doesn't see the fight going away any time soon, at least as long as the clamor for homeownership bumps up against the prospect of decreasing the number of rent-controlled dwellings.
"At the end of the day,'' Peskin said, "it's a fight for the soul of the city -- what the city is going to look like and how it's going to vote.''
Condo conversion plan
The proposed ordinance would provide eligible owners of tenancy in common buildings, or TICs, a one-time exemption from San Francisco's condominium conversion lottery.
Participation would be restricted to TIC buildings with no more than six units. The buildings must be 100 percent owner-occupied, and those owners must have lived in them on Jan. 20. Buildings in which the owners displaced senior, disabled or catastrophically ill tenants after Nov. 16, 2004, wouldn't be considered for the exemption. City officials know of at least 374 units that would be eligible.
There are 330,000 dwellings in San Francisco, 65 percent of them rentals. The yearly cap on condo conversions is set at 200.
E-mail Rachel Gordon at rgordon@sfchronicle.com.
Page A - 21
URL: sfgate.com/cgi-bin/article.cgi
©2005 San Francisco Chronicle
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