Got a fascinating letter from a local lawyer named Richard Hurlburt, who has some thoughts on the TIC-condo conversion legislation sponsored by Sups. Scott Wiener and Mark Farrell. He writes:
I’m a tenant’s rights lawyer and real estate broker. Whenever possible I help tenants facing eviction buy their TIC units. I also own and reside in a TIC unit. My building has twelve units and would not be affected by the proposed law.
I just read the actual text of the legislation sponsored by Sups. Farrell & Wiener and I’m against it.
TIC financing isn’t that difficult anymore. Fractional loans are the norm and not that much more expensive than condominium loans. It does cost a little more to finance a TIC, but the units cost less to begin with. So I don’t really see a hardship on the part of TIC owners who generally have smaller mortgages because they paid less for their units to start with.
The supposed $20,000 per unit condo conversion impact fee to benefit low-income housing is largely illusory. The proposed law contains a reduction for each year the building has participated in the lottery, so a building that participated in the lottery for five years, which is the majority, would get an 80% reduction and pay only $4,000.
Although the law would provide lifetime leases for the few tenants occupying converted units, this benefit is seriously disproportionate. For the tenants getting lifetime leases, good for them but that is a huge windfall for a very few lucky individuals. For tenants generally the legislation is actually quite bad. Once any of the affected units becomes vacant, all future tenants would be exempt from the rent increase protections of the Rent Ordinance. And allowing certain owners to bypass the condo lottery will only encourage more Ellis-TIC conversions.