Comp­romise in sight on TIC condo conver­sions

A fragile consensus is emerging among community groups about how to give Tenancy In Common homeowners on the brink of insolvency and foreclosure some relief while protecting the City’s stock of rental units and tenants.

The City is dealing with what many say is a bottleneck of homeowners who want to convert their TIC residential units into condominiums, thanks to a lottery system that limits these conversions to 200 per year.

Critics say the legislation by Supervisors Mark Farrell and Scott Wiener last year created an loophole that have real estate speculators salivating over the prospect of carving up The City’s rental housing stock.

This situation has been a chronic problem for San Francisco, as shown by several failed attempts by past Board of Supervisors.

Nevertheless, it seems this time a compromise is in the works, but only if all sides stick to the changes proposed last week to address many of the tenants’ concerns.

The proposal, made by Board President David Chiu and Supervisor Norman Yee, with support from Supervisor Jane Kim, offers up a 10-year moratorium on the TIC conversion lottery and excludes five- and six-unit buildings from the lottery in the future.

Advocacy groups say if the changes are watered down when the Board’s Land Use and Economic Development committee takes it up again Monday afternoon, they’re walking out of the deal.

Cynthia Crews of the League of Pissed Off Voters told SFBay:

“We support the amendments but we’d frankly like to see this entire legislation killed. … We don’t like legislation that moves the goal posts. TIC owners bought their TICs knowing the rules of the lottery. They’re changing this now, makes me think that in ten years that the Real Estate industry is going to sort of say, ‘Oh hey, we did this before, we’re just going to do this one more time.’”

Aside from the moratorium and the limitations on the number of eligible units, the proposed legislation would guarantee lifetime leases for tenants of a given building. It would also charge a hefty fee of up to $20,000 — depending on how long someone has been participating in the lottery — to bypass the lottery system entirely.

The idea is that condominiums don’t come with high interest rates and other financial baggage that TICs do, so this would help working and middle class homeowners keep their homes.

But some are only grudgingly bowing to the consensus, and cooperation from them is definitely conditional. One example is Eric Brooks, the sustainability chair of the San Francisco Green Party:

“The Green Party doesn’t think that we should be giving any kind of a break at all to condo-conversion. They’re inherently bad for tenant protections and they promote gentrification and we would prefer to see something much more radical along the lines of finding a way to greatly expand rent control property in San Francisco, at least in exchange for this kind of big giveaway to all these (TIC) owners that want to flip to the condos.”

Brooks also said The City needs to find other ways to make buying a home easier:

“Kudos to Chiu for making this thing so it’s not a total disaster, but we need to go a lot further if we’re going to actually protect this city and keep it from gentrifying. Right now we’re hemorrhaging families and low-income people like crazy in this city because they just can’t live here anymore.”

Steve Collier is an attorney for the Tenderloin Housing Clinic who opposed the initial legislation, so he helped draft the amendments. He said he would now only support the legislation if the amendments were included:

“This allows for a expedited conversion process for TIC owners, while maintaining a limit on the number of conversions by suspending the lottery for the number of years that it would take in order for those conversions to happen through the normal lottery process.”

As for the 2,000 units that will likely be converted in the next few years, Collier points to clauses which give incentives to building more housing:

“If there’s no net gain of converted units, the changes in the lottery and condominium conversion law after the suspension is complete and [the proposed ordinance] is much better for tenants than the current law. … The amount of units built as affordable housing, what makes up for those units, makes a linkage between the number of converted units and the number of affordable housing units, so it’s just a more comprehensive and logical system for creating a nexus between loss of housing and conversion.”

Collier added:

“Not only is the lifetime lease for tenants better, but the increase in owner-occupancy requirements for three and four unit buildings, plus the requirement that the owner-occupancy be the principal residence of the owner; all those things tighten up the law significantly.”

Peter Cohen of the Council of Community Housing Organizations also opposed the initial legislation and was involved in crafting the amendments. He said his organization will only support the legislation if it stays exactly as it is with the amendments included:

“The reduction of eligible buildings to only two, three and four-unit buildings was to be able to focus down on just a smaller range of building types. … The five and six-unit buildings are really small apartment buildings and they’re part of the City’s rental stock, so you lose those and you don’t get them back.”