Condo Conversions

SF bankers now exporting tenant-displacing TIC loans

Sasha Cuttler
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SF bankers now exporting tenant-displacing TIC loans

Fractional mortgage loans used to convert apartments into owner-occupied tenancies-in-common have fed the eviction and displacement crisis in San Francisco, where the median home price just surpassed $1 million for the first time. Now, some of the same San Francisco banks that pioneered fractional loans here have started offered them in the East Bay and on the Peninsula.

TIC housing is an ownership model for multi-unit buildings, where each unit is independently owned. This option appeals to would-be homeowners because it’s cheaper than a condominium, but less fraught than a traditional loan shared by various owners in a TIC building, which does not allow for independent ownership of each unit.

TICs local have grown in popularity in San Francisco as housing prices continue to skyrocket, since they help homeowners find something affordable, although that benefit usually comes at the cost of evicting all the tenants in the building, often including seniors, those with disabilities, and low-income people in rent-controlled units.

Previously, fractional TIC loans were only accessible in SF. Now, as people seek affordable housing outside of expensive San Francisco, the demand for fractional TIC loans has grown. And San Francisco bankers have stepped up to meet that demand, according to a recent article in the San Francisco Business Times (“High-priced SF housing market exports fractional tenants-in-common loans,” June 28).

Sterling Bank & Trust has become well-known for providing fractional TIC loans (more than $480 million worth so far, according to the Business Times), and is the first company to offer the loans outside of San Francisco. “We’re helping the firefighter and school teacher, or what I like to call the ‘non-tech’ buyer, purchase a home,” Stephen Adams, senior vice president of Sterling Bank & Trust, told the Business Times.

Adams is also president of the San Francisco Small Business Commission, presiding over what critics say is a shift in that commission toward rubber-stamping initiatives from the Mayor’s Office rather than defending small business interests. When we contacted Adams to ask about the evictions and displacement caused by fractional loans, he told he had “no comment to make at this time.”

Tommi Avicolli Mecca, the director of counseling programs at the Housing Rights Committee of San Francisco, said that he doesn’t know how the TIC loans might affect those in the East Bay. But he does know they’re bad news for San Francisco, where there’s now a 10-year moratorium on new condo conversions but few controls on the creation of new TICs.

“They’re scary,” Avicolli Mecca told us. “It’s a disaster for San Francisco. Basically, if you’re buying a tenancy in common, you don’t need to condo convert. It used to be that you wanted a condo conversion so you could have a separate mortgage on what you own. With a fractional loan, you have your own mortgage from the start.”

He added that the loans make it easier for sellers to convert buildings into any size that they can market to home buyers. With the loans, combined with the state Ellis Act allowing owners to remove apartments from the rental market, evicting tenants becomes even more profitable.

The Bank of San Francisco confirmed that it also offers TIC loans in the East Bay. The bank will be making them more attractive with interest-only payments, fractional financing for buildings with more than 12 units, and loans up to $2 million.

Dylan Desai, a spokesman for the Bank of San Francisco, told us that the bankers “do not extend financing to buildings where there has been an eviction” and, to their knowledge, they never have. “We’re sensitive to tenant rights.”

Hopefully the other banks offering these loans will be just as sensitive as they branch out into communities in the region that have already been absorbing an influx of working class former San Franciscans.

Chiu mailer highlights Guardian praise, despite our Campos endorsement

Sasha Cuttler
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22
Chiu mailer highlights Guardian praise, despite our Campos endorsement

Politics is dirty business, and I should never underestimate the willingness of politicians to turn any editorial praise they receive into an electoral advantage, distorting the context as needed, a lesson that I was reminded of this week.

Several Guardian readers have called me this week to complain about a mailer dropped on voters by the David Chiu for Assembly campaign, which includes long quotes from Chiu’s endorsements by the San Francisco Chronicle and Bay Area Reporter, as well as positive quotes from the Bay Guardian and San Francisco Examiner.

Although neither the Guardian nor the Examiner has endorsed Chiu — we enthusiastically endorsed David Campos in that race, while the Examiner is waiting until the fall rematch to do endorsements — our readers said the flyer left the impression that we had.

Chiu campaign spokesperson Nicole Derse disputes that view. “It definitely did not leave that impression,” she told me. “We were very clear about who has endorsed.” She said the Examiner and Guardian were included because “it’s important to highlight objective sources like newspapers.”

The Guardian quote was from a July 23, 2013 blog post in which I indeed wrote, “It is Chiu and his bustling office of top aides that have done most of the heavy legislation lifting this year, finding compromise solutions to some of the most vexing issues facing the city.”

It was certainly true at the time, although I received a lot criticism for what I wrote from the progressive community, which pointed out how Chiu had maneuvered himself into the swing vote position on key issues such as condo conversions and CEQA reform. And the compromises Chiu forged actually allowed fiscal conservatives to erode San Francisco’s standing as a progessive city while burgeoning his own political resume.

So I ran another blog post to air those concerns, and then we ran a hybrid of the two in the next week’s paper that closes with this line, “In the end, Chiu can be seen as an effective legislator, a centrist compromiser, or both. Perspective is everything in politics.” BTW, in that original post, I also noted that the Airbnb legislation Chiu was working on should challenge his political skills and reputation, and indeed it took many more months to introduce and has been met by a storm of criticism, becoming the marquee political fight of the summer at City Hall.

After that first post, I also heard from Campos and his supporters predicting that the Chiu campaign would use my well-meaning praise to convey support from the Guardian in a misleading way, a prophecy that has now proven prescient.

But I also think that Campos has done a good job at undermining Chiu’s greatest strength in this election, that of being an effective legislator, by hammering on the reality that things have gotten worse for the average San Francisco because Chiu and his allies have been most effective on behalf of the tech companies, landlords, and other rich and powerful interests that are undermining the city’s diversity, affordability, and progressive values.

“Effective for whom? That’s what’s important,” Campos told us during his endorsement interview, noting that, “Most people in San Francisco have been left behind and out of that prosperity.”

Chiu’s campaign counters by overtly and in whisper campaigns saying that progressives can’t be effective in Sacramento, blatantly overlooking the fact that the incumbent he’s running to replace, Tom Ammiano, has been both a consistent, trustworthy progressive, and an effective legislator who has gotten more bills signed than most of his colleagues, even as he takes on tough issues like reforms to Prop. 13 and prison conditions.

And Ammiano hasn’t just said good things about David Campos, his chosen successor — Ammiano has actually endorsed Campos. 

Chiu for Assembly

Michael Redmond
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106

OPINION

San Francisco is at a crossroads. While some residents benefit from prosperity, an affordable housing crisis coupled with income inequality make this a time of struggle for other San Franciscans.

Our inclusive, diverse culture that has historically made San Francisco a haven for artists, immigrants, and innovators is at stake. Given this, effective progressive leadership is critical to ensuring that our city remains a place where all San Franciscans can afford to live and prosper. That’s why I urge you to vote for my friend, President of the Board of Supervisors David Chiu, to represent San Francisco in the California State Assembly.

As president, David has demonstrated an inclusive, unifying leadership style that has had a transformative impact at City Hall. He really listens to everyone, and brings people together to address our city’s most critical challenges. He combines rock solid progressive values with a fervent drive to do more than talk — to actually get the big stuff done.

The proof is in the pudding: he’s passed more pieces of legislation than any other current supervisor in every major policy arena, and his colleagues have elected him president three times.

David has delivered consistently on our city’s most critical issue: affordable housing. A tenant in San Francisco himself for the past 18 years, David has fought to protect and expand affordable housing across the city, leading efforts to build more housing for homeless veterans, transitional age youth, and seniors.

He supported rebuilding dilapidated public housing projects that have been in total disrepair. He has supported the strengthening of habitability standards in housing across the board. He led the charge to create a 10-year moratorium on condo conversions and to prioritize victims of Ellis Act evictions for our city’s affordable housing opportunities.

After multiple failed attempts by supervisors over two decades, he passed legislation to finally legalize in-law units, preserving one of our city’s largest existing stocks of affordable housing. David will continue to work to stem San Francisco’s affordable housing crisis in the Assembly, including pushing hard to reform the Ellis Act.

David has been a leader on a host of other important issues. An avid biker who doesn’t own a car, David has spearheaded groundbreaking environmental legislation, banning the sale of plastic water bottles on city property, expanding urban agriculture, and prohibiting the delivery of unwanted Yellow Pages. He’s increased funding for community arts, an issue close to my heart as an artist. He has championed language access for our city’s immigrants, and fought for the reunification of LGBT immigrant families.

Under his leadership, San Francisco is the first city in the country to establish the right to civil counsel for low-income residents being denied basic human rights such as housing, as well as to give workers the right to request flexible and predictable working arrangements to take care of their families. He passed progressive business tax reform that will bring $300 million of new revenues over the next decade.

When it comes down to it, we have two Assembly candidates, David Chiu and David Campos, who share the strongly held progressive values of the Guardian’s readers. I am a longtime supporter of the Guardian and have valued its endorsement in my previous races. The difference lies in style and effectiveness.

I know how urgently San Francisco needs a leader in the Assembly who can bring people together to get significant things done. The challenges and opportunities our city faces demand it. I know David Chiu can do this because he has done it, over and over again, in five and a half remarkably effective years of progressive leadership on the Board of Supervisors.

Please join me in supporting David Chiu for State Assembly.

Debra Walker is an artist who serves on the Building Inspection Commission, recently reappointed to that seat by David Chiu.

Staying power

Michael Redmond
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Staying power

rebecca@sfbg.com

Despite the rain on Feb. 8, organizers of a citywide tenants’ convention at San Francisco’s Tenderloin Elementary School wound up having to turn people away at the door. The meeting was filled to capacity, even though it had been moved at the last minute to accommodate a larger crowd than initially anticipated.

“Oh. My. God. Look at how many of you there are!” organizer Sara Shortt, executive director of the Housing Rights Committee, called out as she greeted the hundreds in attendance. “Tenants in San Francisco, presente!”

The multiracial crowd was representative of neighborhoods from across the city, from elderly folks with canes to parents with small children in tow. Translators had been brought in to accommodate Chinese and Spanish-speaking participants.

Six members of the San Francisco Board of Supervisors also made an appearance: Sups. John Avalos, David Campos, Eric Mar, Malia Cohen, Jane Kim, and Board President David Chiu.

In recent weeks, the convention organizers had convened a series of smaller neighborhood gatherings to solicit ideas for new policy measures to stem the tide of evictions and displacement, a problem that has steadily risen to the level of the defining issue of our times in San Francisco.

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Ana Godina, an organizer with the SEIU, went to the convention with her daughter Ella, 5. Godina drove from Sacramento to support her colleagues. Three of her fellow union members have been evicted recently, all of them Tenderloin and Mission residents. Guardian photo by Amanda Rhoades

While several legislative proposals are on track to move forward at the Board of Supervisors, the meetings were called to directly involve impacted communities and give them an opportunity to shape the legislative agenda on their own terms, according to various organizers.

Addressing the crowd, Shortt recalled what she termed “some amazing jiu jitsu” during last year’s tenant campaigns, which resulted in a 10-year moratorium on condo conversions rather than simply allowing a mass bypass of the condo lottery, as originally proposed.

That measure, which won approval at the Board of Supervisors last June, was designed to discourage real estate speculators from evicting tenants to convert buildings to tenancies-in-common, a shared housing arrangement that’s often a precursor to converting rent-controlled apartments into condos.

That effort brought together the founding members of the Anti Displacement Coalition, and momentum has been building ever since. “This is the beginning of a movement today,” Gen Fujioka of the Chinatown Community Development Center, one of the key organizations involved, told the gathering. “We are shaking things up in our city.”

 

MAINTAINING DIVERSITY

Around 160 participants attended the first in a series of neighborhood tenant conventions in the Castro on Jan. 10. The one in the Richmond a week later drew so many participants that organizers had to turn people away to appease the fire marshal.

“The idea of the neighborhood conventions was to solicit ideas,” explained Ted Gullicksen, head of the San Francisco Tenants Union. “The idea of this event is to review existing ideas and ultimately rank them.” From there, the campaign will pursue a ballot initiative or legislative approval at the Board of Supervisors.

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Ted Gullicksen, director of the San Francisco Tenants Union, and his dog Falcor. Guardian photo by Amanda Rhoades

But first, a few speakers shared their stories. Gum Gee Lee spoke about being evicted from her Chinatown apartment last year along with her husband and disabled adult daughter, an event that touched off a media frenzy about the affordable housing crisis taking root in San Francisco.

“There were times that were very stressful for me. I would call places only for the owner to say, ‘I’ll get back to you,’ but they never did,” she said of that ordeal.

“To see everyone here, all kinds of people, it makes me really happy,” she later told the Bay Guardian through a translator. “I just hope they don’t get evicted.”

Mike Casey, president of UNITE-HERE Local 2 and an executive committee member of the San Francisco Labor Council, also made a few comments at the forum.

“Having the ability to live and vote in this city makes a difference,” he pointed out, saying workers who have to commute long distances for political actions because they’ve been displaced from San Francisco are less likely to get involved.

“The struggle of our time is the widening gap between the rich and the poor,” Casey added. “That is exactly what this struggle is about: to maintain that diversity. What we need to move forward on is bold, effective, measurable change that makes sure we are able to protect the fabric of this community.”

Maria Zamudio, an organizer with Causa Justa/Just Cause, emphasized the idea that the problem of evictions in San Francisco is less of a market-based problem and more of a threat to the city’s existing, interwoven communities.

“Those are our neighborhoods and our communities,” Zamudio said. “We’re fighting for the heart of San Francisco. Fighting for strong tenant protections is a necessary struggle if we are going to keep working class San Franciscans in their homes.”

 

ELLIS ACT UNDER FIRE

As Gullicksen noted at the start of the convention, San Francisco rents have ballooned in recent years, rising 72 percent since 2011.

“We are seeing the most evictions we have seen in a long, long, long, long time,” Gullicksen said. “Most Ellis evictions are being done by one of 12 real estate speculators — evicting us and selling our apartments, mostly to the tech workers.”

Even though median market-rate rents now hover at around $3,400 per month in San Francisco, low-income tenants can avoid being frozen out by sudden rental spikes because rent-control laws limit the amount rents may be increased annually.

But that protection only applies to a finite number of rental units, those built before 1979. That’s why tenant advocates speak of the city’s “rent-controlled housing stock” as a precious resource in decline. Long-term tenants with rent control — in the worst cases, elderly or disabled residents who might be homeless if not for the low rent — are often the ones on the receiving end of eviction notices.

From 2012 to 2013, according to data compiled by the Anti Eviction Mapping Project, the use of the Ellis Act increased 175 percent in comparison with the previous year. That law allows landlords to evict tenants even if they’ve never violated lease terms. Advocates say real estate speculators frequently abuse Ellis by buying up properties and immediately clearing all tenants.

Concurrently with local efforts agitating for new renter protections, organizers from throughout California are pushing to reform the Ellis Act in Sacramento.

Assemblymember Tom Ammiano has promised to introduce a proposal by the Feb. 21 deadline for submitting new legislation, and Sen. Mark Leno is working in tandem with San Francisco Mayor Ed Lee on a parallel track to pursue some legislative tweaks aimed at softening the blow from the Ellis Act.

“Our goal is to change the conversation in Sacramento, where tenants’ concerns are routinely ignored,” said Dean Preston, director of Tenants Together, a statewide organization based in San Francisco.

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Those who didn’t speak English were given head sets so they could listen to each of the speakers comments, which were translated into either Spanish or Chinese. Guardian photo by Amanda Rhoades

On Feb. 18, busloads of protesters will caravan to Sacramento from San Francisco, Oakland, and Fresno for a rally. Preston said they’ve got three demands: reform the Ellis Act, restore a $191 million fund that provides financial assistance for low-income and senior renters, and pass Senate Bill 391, which would provide new funding for the construction of affordable housing.

Even though the law is technically intended to allow property owners to “go out of the business” of being a landlord, Ellis Act evictions in San Francisco are most often carried out by speculators who purchase real estate already occupied by tenants, Gullicksen said.

“Our focus is on the most immediate problem, which is the misuse of the Ellis Act by real estate speculators,” Preston said. “It’s urgent to address that specific use. That’s what Ammiano and Leno are looking at, is ‘what’s the best way to stop speculative use?'”

 

LOCAL POLICY CHANGES SOUGHT

Tyler McMillan of the Eviction Defense Collaborative said his group is often the last resort for tenants threatened with the loss of their rental units. “Too often, we face a losing fight at court,” he said. “We need to write better laws that work better to keep people in their homes.”

The legislative proposals moving forward at the local level seek to attack the problem of evictions and displacement from several angles. On Feb. 3, Sup. David Campos introduced legislation to require landlords who invoke the Ellis Act to pay a higher relocation fee to displaced tenants, equaling two years’ worth of the difference between the tenants’ rent and what would have been considered market rate for that same unit.

“It is time that we recognize that tenants must receive assistance that is commensurate with market increases in rent if we are to truly address our affordability crisis and check the rampant growth of Ellis Act evictions,” Campos said.

As things stand, relocation assistance payments are around $5,261 per tenant, and are capped at $15,783 per unit, with higher payments required for elderly or disabled tenants. But at current market rates, a tenant would not last more than a few months in the city relying solely on the relocation fee to cover rental payments.

Surveying the strong turnout at the tenant convention, Campos said, “There is a movement that’s happening in San Francisco to take our city back, and to make it affordable for all of us.” Yet he noted that he is concerned there will be major pushback from the San Francisco Apartment Association and the real estate industry, formidable interests that oppose the relocation fee increase.

Meanwhile, Sup. Mar has proposed an ordinance that would require the city to track the conversion of rental units to tenancies-in-common, a housing arrangement where multiple parties own shares of a building through a common mortgage. Speculators who buy up properties and immediately evict under the Ellis Act often angle for windfall profits by immediately converting those units to TICs.

Campos is also working on legislation that would regulate landlords’ practice of offering tenants a buyout in lieu of an eviction, a trend advocates say has resulted in far greater displacement than Ellis Act evictions without the same kind of public transparency.

Peter Cohen of the Council on Community Housing Organizations said there’s “no silver bullet” to remedy San Francisco’s affordable housing crisis. “This process is going to come up with another bundle of things,” he said. “All of that is also complimentary to the state campaign. You could have five, six, or seven policy measures going forward — and all of them winnable.”

An idea Cohen said has received traction is the idea of imposing an anti-speculation tax to discourage real estate brokers who abuse the Ellis Act by buying up properties and evicting all tenants soon thereafter (see “Seeking solutions,” for details).

During a breakout session at the tenant convention, longtime LGBT activist Cleve Jones piped up to say, “Harvey Milk proposed the anti-speculation tax back in 1979.”

It wasn’t successful at that time, but Cohen said that given the current level of concern about housing in San Francisco, it’s being talked about in some circles as the most winnable ballot initiative idea.

 

TENANTS FIGHTING BACK

At the Feb. 8 convention, tenants shared stories of challenging orders to vacate their rental properties. “The most important thing that has brought us to the victories we’ve had so far is that tenants have stayed in their homes,” Shortt said. “Tenants have fought, tenants have sought help, tenants have organized.”

Tenants from a North Beach building owned by real estate broker Urban Green shared their story of banding together and successfully challenging an Ellis Act eviction. Chandra Redack, a nine-year resident of 1049 Market St., where tenants continue battling with owners who submitted eviction notices last fall, described to the Bay Guardian how her small group of tenants has continued to organize in the face of ongoing pressure, including the owners’ recent refusal to accept rent checks.

“Our organizations only can support tenants when they stand up and fight,” said Fujioka. “The tenants’ resistance themselves is part of the strategy. If we don’t have rights, we are going to create them.”

Paula Tejeda, a longtime resident of the Mission District originally from Chile, told the Bay Guardian that she’d been threatened with an eviction from her home of 17 years, a Victorian flat on San Carlos Street.

“I thought I was dealing with an Ellis Act, now he’s trying his best for a buyout,” she explained.

Living in that rent-controlled unit made it financially feasible for her to contribute to the Mission community as a small business owner, as well as a poet, author, and active member of the arts community, she said. Tejeda is the proprietor of Chile Lindo, an empanada shop at 16th and Van Ness streets.

“Having the rent control made it possible for me to build Chile Lindo, go back to college and get my MBA,” she said. That in turn gave her the resources to employ one full-time and three part-time staff members, she said.

When she was initially faced with the prospect of moving out, “I wanted to shut down and leave, and go back to Chile,” she said. “We are suffocated, as a society that cares only about the bottom line.”

But surveying the hordes of tenants milling about at the convention, she seemed a bit more optimistic. “The fact that this is happening to everyone at the same time,” she reflected, “is kind of like a mixed blessing.”

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Free lunch, had some vegan options. Guardian photo by Amanda Rhoades

Seeking solutions

A number of policy ideas emerged from the neighborhood tenant conventions, which were held by the San Francisco Anti Displacement Coalition in the Mission, Chinatown, Haight/Richmond, Castro, SoMa, and the Tenderloin.

Here’s a list of what tenants came up with at those forums, which attendees ranked in ballots collected at the event. The ideas will most likely result in a November ballot initiative and one or more legislative proposals, which organizers plan to announce in the near future.

Anti-speculation tax: One idea is to impose a tax on windfall profits garnered by speculators who buy up housing and then sell it off without maintaining ownership for at least six years. The tax would be structured in such a way that the quicker the “flip,” the higher the tax. This would require voter approval.

Eviction moratorium: This proposal is to put a yearlong freeze on certain kinds of “no-fault evictions,” instances where a tenant is ousted regardless of compliance with lease terms. State law would prohibit it from applying to Ellis Act evictions. It might potentially require voter approval.

Department of Rent Control Enforcement and Compliance: This new department, which could be done by local legislation, would create a new city department with the mission and mandate to enforce existing tenant-protection laws and conduct research on eviction trends.

Relocation assistance: While Sup. David Campos is working on legislation to upgrade relocation assistance payments to displaced tenants who face eviction under the Ellis Act, this proposal would do the same for all other forms of “no-fault” evictions. This would require voter approval.

“Excessive rents” tax: While the Costa-Hawkins state law does not allow for cities to control rents in vacant units, this proposal would create a tax on new rental agreements where rents exceed an affordability threshold.

Housing balance requirement: This proposal would make it so that approval of new market-rate housing would be restricted based on whether affordable housing goals were being met. It would create new incentives to build affordable.

Legalize illegal units: This would provide a way to legalize the city’s “illegal” housing units that nevertheless provide a safe and decent source of affordable housing. (Board President David Chiu has already introduced a version of this proposal.)

Alerts: February 5 – 11, 2014

Michael Redmond
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0

THURSDAY 6

 

Speaking event: After the Arab Spring 312 Sutter, 2nd Floor Auditorium, SF. www.globalexchange.org/events. 7-8pm, $15 or $5 for students. Three years ago, the Arab Spring started with a single protest in Tunisia and quickly spread across the rest of the region, bringing with it promise of a brighter future. As part of the national Engage America Series, internationally renowned blogger and professor Marc Lynch will discuss the current state of affairs in the Middle East, what’s gone wrong across the region, and what it means for the United States.

 

FRIDAY 7

 

Speaking Event: Islamaphobia Holy Spirit Parish, 2700 Dwight Way, Berk. (510) 499-0537. 7pm, free. Newman Nonviolent Peacemakers and the Fr. Bill O’Donnell Social Justice Committee are honored to present Attorney Zahre Billoo, who will examine the roots of anti-Muslim hate (or Islamaphobia), the funding which makes it possible, how it overlaps with other forms of bigotry, and how best to challenge it.

 

SATURDAY 8  

LGBTQ Rally for Winter Olympics UN Plaza, 7th St and Market, SF. maketheworldbetterSF@gmail.com. 11-1pm, free. Show your support for the victims of escalating fascism in Russia on the opening day of the Winter Olympic Games in Sochi. Recent legislation from the Kremlin unfairly persecutes the LGBTQ community in Russia, with sweeping laws that repress virtually any expression of queerness. Join the rally — and stand up for people who are prohibited for standing up for themselves.  

Citywide Tenant Convention Tenderloin Community School, 627 Turk, SF. www.sftu.org. 12pm, free. The San Francisco Anti-Displacement Coalition was formed by tenant organizations and their allies, who banded together and led the successful fight to curb condo conversions. Its mission is to organize against soaring evictions and rent increases which have resulted in the displacement of thousands of residents. Help build tenant power in SF, and participate in crafting a ballot measure to protect tenant concerns.  

Stop privatization of public goods Mission Cultural Center for Latino Arts, 2868 Mission, SF. (415) 282-1908. 1-6pm, $10 donation (no one turned away for lack of funds). Veolia is a multinational corporation that works to privatize water supply, waste management, transport services, and energy. They are currently pushing for water privatization in Richmond, CA, working against unions and environmental groups. A Veolia VP was also hired to represent BART management during the recent negotiations. Educate yourself and learn more by attending this conference.

Chiu becomes City Hall’s go-to guy for solving tough problems

Sasha Cuttler
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60
Chiu becomes City Hall’s go-to guy for solving tough problems

At the start of this year, when I wrote a Guardian cover story profile of Sup. Scott Wiener (which SF Weekly and San Francisco Magazine followed shortly thereafter with their own long Wiener profiles), he seemed like the one to watch on the Board of Supervisors, even though I noted at the time that Board President David Chiu was actually the more prolific legislator.

Now, it’s starting to seem like maybe we all focused on the wrong guy, because it is Chiu and his bustling office of top aides that have done most of the heavy legislative lifting this year, finding compromise solutions to some of the most vexing issues facing the city (ironically, even cleaning up some of Wiener’s messes).

The latest example is Wiener’s CEQA reform legislation, which the board is poised to unanimously approve at today’s meeting, a kumbaya moment that belies the opposition and acrimony that accompanied its introduction. Rather than a battle between developers and the coalition of progressives, environmentalists, neighborhood activists, and historic preservationists, Chiu and board aide Judson True transformed the legislation into something that benefited both sides.

[UPDATE: For reactions to this post and another perspective on Chiu, read this.]

That effort comes on the heels of Chiu’s office solving another big, ugly, seemingly intractable fight: the condominium lottery bypass legislation sponsored by Wiener and Sup. Mark Farrell. To solve that one in the face of real estate industry intransigence, Chiu showed a willingness to play hardball and practice a bit of gamesmanship, winning over swing vote Sup. Norman Yee to get six votes using some hostile amendments to the legislation.

In the end, Chiu won enough support to override a possible veto by the waffling Mayor Ed Lee, who has always echoed Chiu’s rhetoric on seeking compromise and consensus and “getting things done,” but who lacks the political skills and willingness to really engage with all sides. For example, it was Chiu — along with Sups. Farrell and David Campos — who spent months forging a true compromise on the hospital projects proposed by California Pacific Medical Center, replacing the truly awful CPMC proposal that Lee readily accepted.

“It’s been a very long year,” Chiu told the Guardian. “It’s been important for me to not just to seek common ground, but legislative solutions that reflect our shared San Francisco values.”

Next, Chiu will wade into another thorny legislative thicket by introducing legislation that will regulate the operations of Airbnb, the online shared housing share corporation whose basic business model often violates local landlord-tenant laws, zoning codes, and lease conditions, in addition to openly defying rulings that it should be paying the city’s transient occupancy tax.      

“This challenge has been particularly difficult,” Chiu told us, referring the many hard-to-solve issues raised by companies such as Airbnb, who Chiu and board aide Amy Chan have been working with for several months. In fact, after originally predicting the legislation would be introduced before the board takes its August recess, Chiu now tells us it may need a bit more time to hammer out the details.

We’ll be watching to see how he sorts through the many tough issues raised by Airbnb’s approach, here and in other big cities with complicated landlord-tenant relations, which I will be exploring in-depth in an upcoming Guardian cover story. But if there’s anyone at City Hall capable of solving this one, it’s probably Chiu.

Everyone but Mayor Lee sees SF’s worsening “housing affordability crisis”

Sasha Cuttler
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43

There was a clear theme that ran through yesterday’s Board of Supervisors meeting from beginning to end, something understood equally by renters, homeowners, and politicians from across the political spectrum: San Francisco has a crisis of housing affordability that is forcing people from the city.

And the only person who doesn’t seem to understand or care about that is the person with the most power to deal with the situation, Mayor Ed Lee, who opened the meeting by essentially dismissing both short- and long-term gentrification forces and claiming “our city has some of the toughest anti-displacement laws in the country.”

It was a claim that Lee made twice, first in response to a question by Sup. Eric Mar about Plan Bay Area and the massive displacement of current San Franciscans that it would create by 2040. And it was also how he answered a question by Sup. John Avalos about rents that are now skyrocketing beyond what most San Franciscans can afford.

I followed Mayor Lee back to his office, asking him to explain his claim, and he cited the city’s “elaborate” rent control laws and the Rent Board recently hiring new personnel as he briskly retreated toward his office. But surely he’s aware that displacement is already happening and getting worse, I told him, citing Rent Board figures showing that evictions are now at a 12-year high.

Lee looked at me dubiously and said, “I’ll have to check the figures on that.” I followed up today with Press Secretary Christine Falvey to ask whether Lee did check those figures — which show 1,757 evictions in the last year, up from 1,395 the previous, both numbers representing returns to the mass displacement of the last dot-com boom — and I’ll update this post if/when I hear back.

“It shows he’s out of touch with what’s happening in San Francisco,” Avalos told me in response to the mayor’s remarks.

Lee seemed to bristle at the suggestion that his aggressive economic development policies might have a downside that he’s going to have to deal with at some point. He touts the 44,000 jobs the city has added during his mayoral tenure, even deflecting criticism that he’s too focused on the technology industry by citing estimates that every tech job creates at least four other jobs (seemingly oblivious to the fact that most of these are low-wage service sector jobs, the very people who are being forced from the city).

“I’m just hoping you’re not blaming the 44,000 jobs we helped created,” Lee told Avalos, saying that he understands the concern about the rising cost of living, “but those are 44,000 people drawing a paycheck and taking care of their families.”

Yes, Mr. Mayor, but those paychecks are having an increasingly tough time paying for housing in San Francisco. That concern animated the condo conversion debate that took place later in the meeting, voiced by those focused on the lack of affordable homeownership opportunities and those focused on reducing the city’s rental stock to create those opportunities.

“I don’t think saying ‘it’s good that we have a growing economy’ is enough to address the issue,” Sup. David Campos said during the condo debate, referring to Lee’s earlier remarks.

Speaking near the end that discussion, Campos summarized the concerns expressed by both sides and sought to put the legislation into perspective: while important, the condo deal is a drop in the anti-displacement bucket. “We are only dealing with the issue of affordability in San Francisco on the margins,” he said, later adding, “I don’t think we’re doing enough to deal with the fundamental issue of who gets to live in San Francisco.”

The debate on the condo conversion began with its original author — Sup. Mark Farrell, who represents District 2, the wealthiest and most conservative in the city — explaining his desire to help middle class people who want to own homes remain in the San Francisco.

“This is the most affordable form of home ownership in San Francisco today,” Farrell said of tenancies-in-common, the fiscally and legally precarious middle step between an apartment and condominium. Later, he said, “We need more affordable homeownership opportunities and not less.”

Farrell argued that “this didn’t need to be a zero sum game,” but that’s exactly what the stock of rent-controlled apartments is in San Francisco, where only housing built before 1979 is protected from the market forces that can drive rents up to whatever a landlord demands.

“We have a fixed rent control stock. Every apartment that converts to a a condo is one less unit,” said Board President David Chiu, who worked with Sups. Jane Kim and Norman Yee and tenant group to amend Farrell’s legislation to help both renters and homeowners.  

“These units were once the homes of tenants who were displaced,” Kim said, objecting to the notion that one person’s apartment should be another person’s affordable homeownership opportunity and arguing that the city should be building more condos for first-time homebuyers instead of cannabalizing the homes of the nearly two-thirds of city residents who rent.

Like Chiu and Kim, Yee said that he wanted to help the TIC owners of today without simply clearing out of the backlog and letting the condo lottery continue unabated, which would green-light even more conversion of apartments. “We want to curb the speculation,” Yee said.

That idea that the city should help people who live in the city, without simply feeding the speculative investors who profiteer off of housing in San Francisco, was a strong theme among critics of condo conversion.

A pro-tenant crowd packed the Board Chambers. Although barred by board rules from addressing the condo legislation directly (that occurred at the committee level), one commenter said, “Giving any more power to the real estate market in San Francisco should be considered a crime.”

To help ward off real estate speculators once the annual condo conversion lottery resumes in 2024, the legisation also limited future conversions to buildings of less than four units, instead of the current cap of six units, a change that Farrell resisted.

“This is not an academic exercise anymore,” Farrell said of the condo conversion restrictions that were added to the legislation. “This will negatively impact thousands of TIC owners in the city.”

Farrell’s original co-sponsor, Sup. Scott Wiener, had a more pro-tenant point-of-view, objecting to the changes that Chiu inserted on more narrow grounds. In his comments, he noted how close the two sides were and how they share the same basic goal: preventing displacement of current city residents.  

“The one thing we can all agree with is we have a housing affordability crisis,” Wiener said, praising the city’s rent control and tenant protection laws, but adding, “TIC owners are also part of this city.”

The price of dealing with the rapid growth in the city — whether it comes to infrastructure or housing affordability — was also a point that Wiener made earlier in the meeting as the board approved the term sheet for a massive office and residential development project proposed at Pier 70.

“We are not doing what we need to do to support the public transportation needed for those projects,” Wiener said, also referring to other projects along the waterfront (the Warrior Arena at Pier 30 and the Giants/Anchor Steam project at Pier 46) and in the southeastern part of the city. “We don’t have the transit infrastructure to support our current population, let alone new growth.”

It’s about striking a balance, as Chiu said he did with the condo legislation, and not just a balance between renters and TIC owners. It’s about striking a balance between how to protect the San Francisco of today while planning for the San Francisco of tomorrow.

Yes, that means working with market rate housing developers, and it also means diverting some of their would-be profits into the city’s affordable housing fund and its infrastructure needs. Yes, it means private-sector job creation, but it also means more public sector jobs and providing a safety net for people without jobs or who work as artists or social workers or other professions that are being driven from the city. And it means beefing up our public housing and turning around the exodus of African-Americans, concerns raised at the meeting by Sup. Malia Cohen.

We at the Guardian last year looked at how Oakland has become cooler than San Francisco, largely because of the displacement from here. And now, even many people within the tech community have begun to decry the gentrifiction that is being driven by Mayor Lee’s narrow economic development vision.

“Plan Bay Area is an opportunity to think regionally and strategically about planned growth,” Lee said when addressing Mar’s question, sidestepping the direct answer that Mar sought on a set of specific proposals for mitigating some of the displacement planned for San Francisco and maintaining this city’s diversity.

Yes, we do have an opportunity to think strategically about the city we’re becoming and who gets to live in it, but only if we don’t think “jobs” is the answer to every question.

Supervisors approve condo legislation with veto-proof majority

Sasha Cuttler
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Supervisors approve condo legislation with veto-proof majority

The San Francisco Board of Supervisors today voted to approve compromise legislation that will allow more than 2,000 tenancy-in-common homeowners to convert to condominiums in exchange for a 10-year moratorium on the city’s current condo conversion lottery that now allows 200 conversions annually.

Approved by a veto-proof 8-3 majority after some last amendments were shot down by the six supervisors who most steadfastly supported the version that Board President David Chiu took the lead on crafting, this was a big victory for tenant groups who strongly opposed the original legislation, which did not include the moratorium and other restrictions.

“It’s great. We’re going to see a significant drop in condo conversions in the future. All of us tenants are very happy,” San Francisco Tenants Union head Ted Gullicksen told us after the hearing, which was packed with tenant supporters.

Sup. Mark Farrell, who sponsored the original legislation, decried how divisive the issue had become, criticized the approved version as deviating from his original intent of helping TIC owners in exchange for a fee that would help fund new affordable housing, and said, “This doesn’t need to be a zero sum game.”

But Chiu and the five supervisors who supported his version – Jane Kim, Norman Yee, David Campos John Avalos, and Eric Mar – noted the finite number of rent-controlled apartments in the city and the need to protect them from being converted into condos.

“How do we balance the needs of tenants who fear being evicted with TIC owners looking for relief?” Chiu said of the balance he aimed to strike, which he continued to tweak with new amendments today, including allowing TICs with all owner-occupied units to move forward if the legislation is challenged in court, an event that would otherwise freeze all condo conversions until the lawsuit is resolved.

Sup. London Breed wanted even greater flexibility in that so-called “poison pill” aspect of the legislation, which tenant groups had insisted on to prevent the bypass from going through even if the moratorium was challenged. Breed proposed allowing condo conversion applications to proceed for a year after a lawsuit was filed, but Chiu said that would let TIC owners convert to condos while challenging other aspects of the legislation, such as the lifetime leases for tenants in converted buildings.

Breed and Sup. Malia Cohen, who privately and rather grimly conferred with one another and sometimes Chiu before the item began a little after 4pm, were clearly the two swing votes on the question of whether the legislation would reach the crucial eight-vote threshold needed to override a possible mayoral veto. Mayor Ed Lee has refused to take a position on the issue, leaving both sides in the dark.

But after the motion to insert Breed’s amendments failed on a 5-6 vote, the board voted 8-3 to approve Chiu’s version of the legislation, with Sups. Farrell, Scott Wiener, and Katy Tang opposed. A subsequent vote on a version of the legislation backed by Farrell and Wiener – which contained a weaker poison pill and more flexible owner-occupancy provisions – then failed on a 4-7 vote, with Breed joining the three dissenting supervisors.

Underscoring this legislation was what some supervisors called a “housing affordability crisis” in San Francisco, an issue that Mayor Lee was asked about at the start of the meeting, which he deflected by claiming “our city has some of the toughest anti-displacement laws in the nation.”

We’ll analyze that discussion and offer more details on the condo conversion debate and the politics behind it tomorrow in the space, so check back then.      

Rival condo conversion measures finally up for board vote

Sasha Cuttler
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58

Controversial condominium conversion lottery bypass legislation is finally headed for a vote by the full Board of Supervisors this Tuesday. Befitting legislation that has stirred strong emotions and traveled a twisting political path over the last six months, there are new dramas and uncertainties cropping up at the last minute, including the lingering unknown of where Mayor Ed Lee stands.

Originally co-sponsored by Sups. Mark Farrell and Scott Wiener, the legislation was intended to allow 2,000-plus tenancy-in-common owners to buy their way past the city’s lottery that allows 200 conversions to condominiums each year. But tenant groups and their progressive allies strenuously opposed the idea, and it was amended by Sups. David Chiu, Jane Kim, and Norman Yee working with tenants to couple the bypass with a 10-year moratorium on new conversions, thus clearing the backlog without opening the door to speculators taking more rent-controlled apartments off the market.

The Land Use Committee voted June 3 (2-1, with Chiu and Kim voting yes and Wiener opposed) to send the tenant-supported legislation to the full board and keep a Wiener-backed rival measure stuck in committee. But since then, Wiener invoked a board rule allowing four supervisors to pull the stalled legislation out of committee, getting Farrell and Sups. Katy Teng and London Breed to place that rival measure on Tuesday’s agenda as well.

Tenant groups decried the move and have put out the call for supporters to flood City Hall for the 2pm meeting, but Wiener told us that the differences in the two pieces of legislation are minor. One difference deals with whether transfers of ownership interest will affect an applicant’s spot in the queue and the other involves the so-called poison pill inserted by tenant groups, which would freeze the conversion process if anyone challenges the legislation in court, as real estate interests have threatened to do.

Wiener said the tenant-backed legislation’s changes to condo conversion eligibility, such as a 10-year wait period and banning future conversions of buildings with more than five units, that would remain in place after a successful legal challenge is an unfair overreach. But Chiu said tenant groups have already compromised as much as they can and they need this protection: “This is a carefully constructed compromise, and for the first time tenants groups are supporting thousands of condo conversions.”

Breed’s concerns about the poison pill provision — which was why she said she went along with Wiener’s play to bring up the rival measure — go even beyond Wiener’s. While most concerns involved a lawsuit from real estate interests, Breed worries about a pro-tenant litigant who wants to stop all condo conversions.

“If anyone chose to sue, it would help renters by shutting down everything completely. Where is the incentive not to sue?” Breed told us, noting that she still doesn’t have a solution to the problem, but she wanted the leverage of rival measures in order to address the issue. “I’m hoping it’s a win-win for renters and TIC owners,” she said. “Everyone else is not my concern right now.”

But the real estate interests will almost certainly try to preserve an ability for speculators to continue funneling more rent-controlled apartments into the real estate market, and just yesterday, the San Francisco Association of Realtors announced the hiring of an influential new point person on lobbying and housing issues: Mary Jung, a former spokesperson for then-Mayor Gavin Newsom before moving over to represent PG&E, and who was last year elected chair of the Democratic County Central Committee.

That could make a difference when it comes to Mayor Lee, who has resisted efforts by both sides to weigh in on the issue, saying only that he supports both tenants and TIC owners and that he understands the concerns about opening the door to a flood of new conversion requests.

“The one wild card here is no one know where the mayor is,” Wiener told us, noting that neither side is likely to get the eight votes that would be needed to override a veto. “The mayor, if he wanted to, could have significant leverage in crafting a compromise.”
Chiu said that he’s confident that his version of the legislation has the six votes needed to pass, but that it is still unclear what Mayor Lee will support, despite Chiu asking Lee to weigh in publicly in February and privately during a meeting yesterday. As Chiu told us, “We’ll see.”

Condo bypass legislation now before the full board

Sasha Cuttler
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Condo bypass legislation now before the full board

Controversial condominium lottery bypass legislation — sponsored by Sups. Mark Farrell and Scott Wiener but substantially modified by tenant group that strongly opposed the original legislation, with the help of Sup. David Chiu, Jane Kim, and Norman Yee — is finally coming to the full Board of Supervisors today (Tues/7, starting at 2pm).

Those involved in the negotiations say the legislation will likely to be returned to the Land Use Committee because of amendments being introduced today that the City Attorney’s Office has deemed substantial enough to require another public hearing. [UPDATE: The board voted unanimously to send this back to committee, which will consider it on Monday the 13th].They include a provision pushed by tenant groups that would scuttle the lottery bypass if the 10-year lottery moratorium is challenged in court. 

That moratorium was pushed by tenants and their supporters as a tradeoff for letting a backlog of around 2,000 tenancy-in-common owners buy their way out of the city’s lottery for the annual allowed conversion of 200 TICs into condominiums, which are more valuable and easier to sell and finance than TICs.

Farrell told the Guardian late last week that he was still negotiating with both sides and hopeful that he might be able to support the legislation, despite the hostile amendments that Chiu made which were opposed by Farrell and Wiener in committee.

San Francisco Tenants Union head Ted Gullicksen told us that the tenants’ side was willing to accept a couple of the technical amendments that Farrell proposed during negotiations with them, including exempting from the bypass fee the 19 building that have awaited conversion the longest and allowing some owner-occupier changes as the bypass is phased in over six years.

He said Farrell also proposed that if less than 2,000 condos opt for the bypass, then the difference in numbers would be added to the allowable number of condos in the first year that the lottery is restored, which the tenants’ groups haven’t yet agreed to.

Farrell and Wiener are also expected to offer other amendments, but the tenant groups have said they’ve gone as far as they’re willing to in allowing any increase in condo conversions, and they seem to have six solid votes lined up on the board.

Yet it’s still an open question how new amendments might affect those political dynamics, how the real estate industry (which simply wants as many condo conversions as possible) will respond, whether Mayor Ed Lee (who has avoided taking a position on the legislation) will sign or veto whatever emerges, and whether whoever is left unsatisfied by this deal will try to go to the ballot.

In other words, there may be some tricky political maneuvering ahead, so stay tuned. 

Proposal would halt condo conversions for ten years

Sasha Cuttler And Mary Magee
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77

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.”

No progress in condo conversion standoff, despite the Chron’s spin

Sasha Cuttler
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93

Perhaps it was just an unfunny April Fool’s Day joke or some wishful political spin, but the San Francisco Chronicle’s April 1 article about how tenancy-in-common owners and their political supporters are pushing legislation that would allow them to bypass the condo conversion lottery seriously misrepresented the city’s biggest current political standoff.

Nevermind the article’s over-the-top bias in favor of those poor, hard-luck TIC owners, like the featured Pacific Heights couple forced to raise their baby in a closet when all they really want to do is flip the apartment they bought for a profit. Or how the Chron all-but-ignored the fact that these TICs were rent-controlled apartments in a city where two-thirds of citizens rent. That kind of top-down view of the world is pretty typical for the Chron, even in its news stories, despite the paper’s strained claim to “objectivity.”

No, the article’s real sin was to get the basic facts wrong on where this political stalemate now stands, presenting the wishful spin of one side as if it were the latest news. Between the headline, “Owners seeking condo conversions may have shot” and the first deckhead, “Making progress” (which plays off this paragraph. “’I think we’re making progress in our discussions and negotiations,’ said [sponsoring Sup. Mark] Farrell, while noting the talks with tenant advocates, TIC owners, and real estate interests are ‘far from the finish line.’”) the article leaves the impression current negotiations may produce a compromise.

But the problem is that there aren’t any current negotiations between the two sides, and there haven’t been for weeks, according to tenant and other involved sources. In fact, they say there’s been no movement in this standoff since almost a month ago when I last reported that tenant groups and progressive supervisors were preparing a set of hostile amendments to the legislation.

They would allow a one-time condo lottery bypass for the nearly 2,500 TIC owners in the pipeline in exchange to shutting down the lottery for many years and preventing any conversions of rent-controlled apartments into condos until city builds a comparable amount of new affordable housing, and then probably restricting condo conversions to smaller buildings after that to protect large rent-controlled apartment buildings from real estate speculators.

That proposed compromise, which the article barely mentions before letting Farrell say “his legislation poses no threat to rent control,” would help the poor Pacific Heights couple at the center of the article. But the real estate industry and its conservative allies don’t really care about that couple as much as they do maintaining the flow of rental units into the real estate market, which is why the negotiations have broken down.

Instead, the Chron has Sup. London Breed – who is indeed a swing vote of the issue, but not one that tenant groups are counting on given how close she is to Plan C and the landlord lobby – citing a compromise proposal that would prevent the new condo owners from selling their properties for five years to discourage real estate speculation.

Perhaps that’s something the TIC owners and real estate interests that the article relies on think is a realistic compromise, but it’s not something that has been seriously discussed with tenant groups, mediating Sup. David Chiu, or the other interests that would be needed to pass this legislation.

Sara Shortt, the token tenant activist that the Chron talked to for the article, confirmed to us that there is no real compromise deal in the works and preventing the creation of new condos from existing apartments is a bottom-line issue that unites everyone who is now opposed to this legislation.

“The Plan C/Realtor etc. won’t concede on our key issue: restriction on future conversions in exchange for the bypass. We have given as much as we can give and they have given virtually nothing in return,” Shortt, executive director of the Housing Right Committee, told us by email.

Even Sup. Scott Wiener, who co-sponsors the legislation with Farrell, told us there has been “no change from before,” when negotiations broke down. But the legislation is on the April 15 agenda for the Land Use and Economic Development Committee – for the fifth time, with most hearings canceled because of the lack of negotiating progress.

If the Realtors and Plan C (which is dominated by real estate and banking interests) stick to their intransigent position – hurting this poor Pac Heights couple in the process, which the Chron fails to note – then tenants and progressive supervisors are likely to amend the legislation and call the bluff of those who claim this issue is simply about poor TIC owners stuck with shared mortgages.

The “mystery” of the homeless families

Zelda Bronstein
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The “mystery” of the homeless families

The Chron’s having a hard time figuring out why there are so many more homeless families looking for help.

“It’s been difficult to pin down any kind of trend,” said Elizabeth Ancker, assistant program director at the nonprofit Compass Connecting Point, the group that manages the waiting list and helped find Bailey a shelter room. “We’re really just seeing more of everybody – every demographic, in every situation.”

No shit.

Of course there are more homeless families. The cost of housing is beyong the reach of even many full-time employed people, and anyone who lacks a sizable weekly paycheck is completely out of luck. When dozens of high-paid workers are competing for every single available apartment, there’s no room at all for anyone else.

And more and more families are losing their homes to eviction as landlords seek to cash in on the demand for tenancy-in-common units.

Gavin Newsom calls it “the burden of success.” But it’s not a burden for the successful; it’s a burden for those who are struggling — and this city has never asked the winners in the economic boom to pay a fair share to help those who are being displaced and hurt.

The city’s scrambling to find public-housing and nonprofit alternatives, but there aren’t anywhere near enough places to meet the need. And there won’t be, not for a long time, not without a whole lot more money. Building affordable housing is expensive and time-consuming.

The bottom line: In a crisis like this one, the cheapest affordable housing is existing affordable housing, and the best way to prevent homelessness and keep families off the streets is to prevent evictions and TIC/condo conversions. Why the Chron can’t figure that out is anyone’s guess.

Condo conversion compromise in the works despite Realtors’ resistance

Sasha Cuttler
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180

[UPDATED BELOW] Negotiations between tenant advocates and real estate interests (including the political advocacy group Plan C) over the controversial condo lottery bypass legislation haven’t gone well or found common ground. But sources tell the Guardian that Sup. Jane Kim and Board President David Chiu, who has been mediating the dispute, are preparing to introduce compromise amendments that have the support of the San Francisco Tenants Union and other tenant advocates if a deal can’t be worked out with real estate interests.

Details are still being hammered out with advocates and the City Attorney’s Office, so the hearing scheduled for this Monday at the Land Use and Economic Development Committee will likely be postponed until March 25. But the basic deal is to allow the roughly 2,000 tenancies-in-common now seeking to convert into condos to do so in exchange for a long moratorium on new condo conversions, possibly indexed to construction of new affordable housing for the renters who comprise nearly two-thirds of San Franciscans.

The original legislation by Sups. Mark Farrell and Scott Wiener is being strongly backed by both current TIC owners who want the ability to refinance and Plan C and other real estate interests that want to continue converting ever more rent-controlled apartments into condos, rather than abiding the city’s current limit of 200 per year, awarded through a lottery system. The SFTU has strenuously resisted opening up those flood gates, but it’s open to clearing out the backlog in exchange to shutting the gates for awhile (see my story in this week’s Guardian for more on the political dynamics surrounding this issue).

“We’re hopeful that a majority of the board will support amendments which will significantly protect tenants and which will allow a version of the Wiener-Farrell legislation to be approved,” SFTU head Ted Gullicksen told us.

Progressives on the board oppose the legislation as currently written, and the swing votes are thought to be Sups. London Breed (which Plan C supported in the last election in exchange for what it says was her promise to support more condo conversions, an assurance she denies making), Norman Yee (who was brought into the Chiu-mediated negotiations), and Malia Cohen, with just one of them needed to force changes to the legislation.

But the real estate interests – including Plan C, the Association of Realtors (whose government affairs director we left a message for and are waiting to hear back from, and we’ll update below if/when we do), San Francisco Apartment Association, and other downtown-based groups – who are pushing for more condo conversions are likely to strongly resist the amendments. They simply want more rent-controlled apartments turned into condos they can sell, period.

Their perspective is reflected in SF Apartment Magazine, put out by the San Francisco Apartment Association, which every month offers advice to real estate investors and apartment building owners on various ways to buy apartment buildings, evict tenants or increase their rents, and convert the buildings to TICs or condos.

It runs a regular column called “TIC Corner” with the latest tricks for financing acquisitions and getting rid of those pesky tenants. In the November 2012 issue, for example, attorney D. Andrew Sirkin wrote excitedly about a new Securities and Exchange Commission rule that will now allow owners to advertise the sale of apartment buildings as TIC/condo investments, which he said “will dramatically ease the regulatory burden for real estate entrepreneurs wishing to raise money for apartment acquisitions and make it much easier to find investors.”

Another feature story in the magazine, “The ABCs of OMIs,” teaches these investors all the tricks for evicting tenants from their buildings, while “Roommate Roulette” offers advice to owners of rent-controlled buildings for keeping new roommates of existing tenants off the lease so they can charge market rate rents as soon as possible.

And, of course, the magazine is filled with ads for San Francisco apartment buildings that are for sale and just waiting to be cleared of tenants and turned into amazing real estate investment opportunities. Gullicksen says it is this mentality, applied to what even Mayor Ed Lee has called the city’s “precious few rent-controlled apartments,” that has animated the opposition to the Wiener-Farrell legislation. SFTU had planned a rally for Monday called “Stop Rent Control Attack,” which has now been postponed until March 25.

UPDATE 3/11: Sup. Wiener got back to us and said, “I hope we can move to a compromise and I don’t want to prejudge that compromise.” Asked about the concept of approving TICs in the pipeline in exchange for halting on all condo conversions for some number of years, he said, “It’s definitely something to explore, a pause in the lottery, and I’m open to that. But the devil is in the details.”

Compromised position

Andrew Lam
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Compromised position

steve@sfbg.com

When Mayor Ed Lee came to the Board of Supervisors for his monthly “question time” appearance Feb. 12, Sup. David Chiu tried to get some sense of where the mayor stood on a controversial piece of legislation that would allow more condominium conversions.

Chiu explained the complexities and implications of an issue where the two sides have dug in and appear to have little common ground, and he asked the mayor for some guidance.

“What is your position on this pending legislation?” he asked. “What protections would you support to prevent the loss of rent-controlled housing in our increasingly unaffordable city? How would you address the concern that if we allow the current generation of tenancy in common owners to convert, we will replace then with a new generation of TIC owners and additional real estate investments that will lead us right back to an identical debate within a short time?”

But if Chiu and other board members were looking for leadership, direction or a clue of where the mayor might stand, they didn’t get it. Lee said he understood both sides of the issue and hoped they could reach a consensus solution — without offering any hints what they might look like or how to achieve it. “I can’t say that I have a magic solution to this issue that will make everyone happy,” the city’s chief executive explained.

Asked by the Guardian afterward why he didn’t take a position and whether he might be more specific about how he’d like to see this conflict resolved, he replied, “I actually did take a position, even though it didn’t sound like it, because I actually believe they have good points on both sides.”

That’s a typical answer for a mayor who rose to power preaching the virtues of civility and compromise and striving to replace political conflict with consensus. But now several major, seemingly intractable issues are facing the city — and insiders say Lee’s refusal to take a strong stand is undermining any chance for successful.

The lack of mayoral leadership has been maddening to both sides involved in the negotiations over the condo-conversion legislation. Tenant advocates say the mayor’s waffling hardened the positions on both sides and emboldened the group Plan C and its allies in the real estate industry to reject the compromises offered by supervisors and tenant advocates.

“It’s very unhelpful,” San Francisco Tenants Union head Ted Gullicksen said of Lee’s refusal to take a stand. “Someone needs to kick the realtors in the butt, and that’s not happening. They have no impetus at all to compromise.”

Then there’s the case of California Pacific Medical Center’s proposed new hospital, a billion-dollar project that would transform the Cathedral Hill neighborhood and have lasting impacts on health care in San Francisco.

The mayor’s eagerness to get the deal done — even if it wasn’t the best deal for the city — led to a proposal that fell apart last year under scrutiny by the Board of Supervisors. That project has now been in mediation for months — and sources tell us they’re getting close to a deal that has little resemblance to the anything offered by the Mayor’s Office.

California Nurses Association Director of Public Policy Michael Lighty, who has been involved with the CPMC negotiations, said Lee’s unwillingness to take a strong and clear stand, or to help mediate the dispute once the deal blew up, is why this negotiation has been so difficult and protracted.

“If he had engaged stakeholders and the supervisors, we wouldn’t have had to go to the brink last summer,” he said. “You’ve got to have clear objectives and be willing to fight for those, and that means saying no…If you’re willing to accept any deal and just put political spin on it, this is what you get.”

 

 

ADMINISTRATOR-IN-CHIEF

Neither Lighty nor others involved in the CPMC negotiations would discuss details of the pending deal, as per the instructions of mediator Lou Giraudo. But they did talk to the Guardian about the political shortcomings that led to such a protracted mediation process on a project that has been in the works for many years and involving a looming state deadline to replace the seismically unsafe St. Luke’s Hospital.

Lighty called Lee’s conciliatory approach to CPMC “an administrative orientation and not a political one,” noting that what worked during Lee’s long career as a city administrator may not be working well now that he’s in the Mayor’s Office dealing with issues where consensus isn’t always possible.

“I don’t think it’s a very sophisticated view and I don’t think it’s one that produces the best results,” Lighty said.

Lighty did say the negotiations were getting close to resolution. “What comes before the board is going to be vastly superior to what the mayor and CPMC proposed,” he said. “I think what you’ll find whenever this comes out is it will repudiate the mayor’s approach.”

He contrasted Lee’s style to that of his predecessor, Gavin Newsom, who took positions on most controversial issues and would often get involved with forcing his allies to cut deals. For example, shortly after taking office on 2004, Newsom demanded that his allies in the hospitality industry end their lockout of hotel workers, and when they refused he turned on them and even famously joined workers on the picket line, pressuring the hotels to soon end the lockout.

“Why did you need to bring in an outside mediator for CPMC? Why didn’t the mayor do that?” Lighty asked, noting that Lee has stayed away from the current negotiations.

Ken Rich from the Mayor’s Office of Economic and Workforce Development has been in those meetings but didn’t return our call. Mayoral Press Secretary Christine Falvey has also ignored repeated messages seeking comment on the issues raised in this story.

Rudy Nothenberg, who negotiated big deals on behalf of five successive mayors before Lee and who has been critical of the Warriors Arena deal that the Mayor’s Office has negotiated, said Lee’s unwillingness to take strong stands with developers is hurting the city.

“I was able to say I’m going to get the best deal I can for the city,” Nothenberg told us, saying he approached all negotiations, including the construction of AT&T Park, with the understanding from the mayors he worked for that he could simply say no to bad deals. “You need to bargain for the city as if these guys walked away, well, then that’s okay too.”

Sup. David Campos, who has been trying to get CPMC to strengthen its commitment to keeping St. Luke’s open as a full-service hospital, agreed that, “There have to be times when you’re willing to say no.” And on the CPMC project, Campos said that fell to the supervisors when the Mayor’s Office wasn’t willing to. “It was clear that the board was not going to approve it,” Campos said, “and sometimes you have to do that to get to a result you can live with,”

UCSF Political Science Professor Corey Cook said the problem is less with Lee’s overall philosophy than with what is strategically smart on individual issues.

“The mayor’s strength is in trying to come up with consensus measures,” Cook told us, calling the approach “generally a good one” and saying “the decider isn’t always who you want, then you get George W. [Bush].” Yet Cook also said intractable problems like the condo conversion debate may require a different approach. “Sometimes you do need to stake out clear ground to limit the terms of the debate.”

 

 

CHIU’S CENTRAL ROLE

Chiu has at least been willing to put his energies behind his belief in compromise, taking an active role in the CPMC and condo negotiations, as well as complicated current negotiations involving how to legalize but limit Airbnb’s shared housing business in San Francisco, which involves landlord-tenant-neighbor dynamics, regulation of private leases, and complex land use and taxation issues.

“It’s been a very long month. I’ve been going around the clock on several challenging negotiations,” Chiu told the Guardian. “The most important things to work on are often the ones that are the most difficult to get done.”

Chiu was reluctant to discuss the negotiations, calling it a sensitive moment for each of them. But he did admit that he was disappointed in Lee’s non-answer to his publicly posed question. “I had hoped for a little more direction,” Chiu said. And while these negotiations haven’t shaken his faith in compromise, he did say, “It depends on the substance of the issue whether there are common ground solutions that are superior to two warring sides.”

But all involved in the condo debate say it appears we’ll be stuck with the latter. “The two sides are so far apart that I don’t know what a compromise that both sides would live with would even look like,” Campos said. “There are certain issues where I don’t think compromise or consensus is possible.”

On this one, tenant advocates are trying to protect a finite supply of rent-controlled housing and real estate interests want to convert that same housing into condos. “If the issue was just existing TIC owners, we would come to an agreement,” Gullicksen said. “But clearly the agenda of Plan C and the realtors is they just want more condos.”

Plan C board member Kat Anderson told us, “I have a simple approach to this: Home ownership is important to me.”

She was undeterred by arguments that thousands of new condos are now being built in San Francisco, but there’s a steadily dwindling number of rent-controlled apartments in a city where two-thirds of San Franciscans are renters.

Anderson made it clear that she wants to not only allow the backlog of condo applicants to be approved, but she doesn’t want to slow the flow of condo conversions for a few years thereafter or place TICs themselves under the cap, compromises offered by Gullicksen. “The worry is that if you change the system, it will never come back and we’ll lose our tiny toehold of 200 units [that the lottery allows to be converted to condos annually],” Anderson said. And so we end up with the very thing Lee sought to avoid: a big, nasty, divisive public fight that will probably end up being decided by big money and deceptive campaign mailers rather than a civil, deliberative political process. And the mayor has nobody to blame but himself.

Plan C, and the C stands for Condo conversions

Sasha Cuttler
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229
Plan C, and the C stands for Condo conversions

No politically savvy San Franciscan has ever really bought the rhetoric espoused by the so-called “moderate” political action group Plan C that it’s all about finding middle ground between what its website calls “a ‘downtown’ machine, and a far-left, dogmatic, so-called ‘progressive’ machine.” As if that unbalanced labeling wasn’t enough of a indicator, the fact that its funding comes from all the biggest cogs in the downtown machine should be.

But now, as the group’s members aggressively work to open the flood gates on converting San Francisco’s rent-controlled apartments into privately controlled condominiums, it’s become more clear than ever that the C stands for Condo and that the financially motivated group is moving the agenda of the real-estate and investment interests that dominate its Board of Directors.

City Hall sources connected to the ongoing meetings that Sups. David Chiu and Mark Farrell have been holding with stakeholders on the controversial condo lottery bypass legislation sponsored by Farrell and Sup. Scott Wiener say there were indications of possible compromise that came out of the first mediation meeting.

That one primarily involved the tenant advocates who have led the charge against the legislation and the representatives for tenancy-in-common owners seeking to buy a bypass to the city’s condo conversion lottery that only allows 200 new condos per year. There were whispers that came from that meeting of a compromise that would allow a one-time bypass in exchange for shutting down the lottery for several years, or indexing it to the construction of new housing for low-income San Franciscans.

Since then, the sources say, Plan C and their partners in the real-estate industry have dominated the meetings with their dogmatic advocacy for indefinitely allowing the maximum number of condo conversions. Despite public statements by Farrell and Wiener that they just want to clear out some backlog without encouraging more landlords to convert apartments to TICs in the future, Plan C just wants to feed more affordable apartments into the expensive real estate market.

Some basic research on the group and its Board of Directors seems to show that this position is about financial self-interest rather than values or ideology.

Plan C Co-Chair Steve Adams is a regional manager for Sterling Bank & Trust, which has consistently been one of the city’s top TIC lenders and which recently sponsored a forum encouraging more conversion of apartments, promising to increase its loan volume, and painting a rosy picture of the TIC financing market that belies Wiener’s claims that TIC owners can’t get financial relief and need the city’s intervention.

One of the key presenters at that symposium was TIC attorney Lyssa Paul, who is also a Plan C board member and someone who makes her living creating more TICs. Other members of the 12-member board who make their living in the real estate industry and benefit directly for TICs conversions are Amanda Jones and Brian Hecktman. Other bankers or investment managers on the board that benefit from the TIC business are Ashley Lyon and Bob Gain.

Co-Chair Mike Sullivan is a venture capital attorney who created Plan C in 2001 and used it to help then-Sup. Gavin Newsom sell his Care Not Cash homelessness plan and run for mayor. Randy Brasche is in software marketing and got involved in the issue being frustrated with the condo lottery and [[CORRECTION/DELETION: last year]] forming the San Francisco TIC Coalition.

Board member David Fix is [[CORRECTION/ADDITION: the former]] president of the Small Property Owners of San Francisco, so it’s possible that his interest is as much ideological as financial, particularly given his past public statements against rent control. That may also be the case with Baha Hariri, a principal at A&F Properties and the former political director of the downtown-funded-and-created Committee on Jobs.

Among the downtown players that fund Plan C, which was sitting on $73,872 in the bank as of the start of this year, are the Committee on Jobs, the San Francisco Association of Realtors, PG&E, San Francisco Apartment Association, Small Property Owners of San Francisco, Shorenstein Realty, the San Francisco Chamber of Commerce, and venture capitalist Ron Conway.

So Plan C appears to be little more than Plan A’s deceptive effort to push Plan Condo. BTW, I’ve been waiting more than 24 hours now to get a call back from the Plan C board, after leaving a message with its only paid administrator, Richard Magary, who told me Sullivan and his colleagues are all quite busy now. But I’ll be happy to update this post if and when I hear back.

2/22 UPDATE: Still no call back from Plan C, but Fix made a comment requesting the two minor corrections above. C’mon, Plan C, gimme a call, what are you so afraid of?

Can we have cool new additions without gentrifying the Mission?

Sasha Cuttler
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44

Do livability and gentrification go hand-in-hand? In other words, as you improve a neighborhood like the Valencia Street corridor with bike lanes, wide sidewalks, parklets, and other improvements that are part of the so-called “livability agenda,” does that necessarily drive up rents and force out the working class?

That was a contention made to me recently by owner of nightclubs and small business advocate Michael O’Connor, who has been critical of the Valencia Street improvement project and other initiatives supported by the group Livable City and its Executive Director Tom Radulovich. And it’s part of a larger discussion about whether neighborhoods pay a price for their own success.

O’Connor says the toll taken by livability projects is just too high in the form of rising rents and lost diversity, which is why he’s focused on Oakland for his latest business ventures. Radulovich understands the concern, but he says that safety measures like pedestrian-friendly design and lighting improvements shouldn’t be avoided simply because they make a neighborhood more attractive, and that the answer is making sure social justice and equity remain part of these political conversations.

Frankly, as a resident of the Mission, I had to admit O’Connor’s point that the Valencia Street Improvement Project – in combination with condo conversions, the latest dot-com boom (those dreaded Google-busers), and other upward pressures on cost of living – had the the effect of sterilizing and gentrifying that once-vibrant corridor.

Now, those who want to open cool new businesses in the area have turned to Mission Street, where the commercial rents are still reasonable but also rising, and there are some people wringing their hands about that now too. It’s sort of an economic development domino theory in reverse.

The Mission Local blog last month ran a post that mentioned my friend Illy McMahan’s groovy new store on Mission near 20th Street: Carousel SF, a consignment store featuring the stylishly re-purposed furniture, golden flea market finds, and the works of local artists (many from the Burning Man world, where McMahan met her business partner Kelley Wehman among the indie circus freaks of the Red Nose District).

The article presented that and other more upscale new Mission Street businesses – including Hi-Lo BBQ and Mission Oyster Bar – as spilling over from their “saturation” of Valencia Street, and some comments denigrated the “yuppie real estate developers” behind the trend and said, “Will the last Latino left in the Mission please turn off the lights on the way out.”

I understand the sentiment, but I’m still troubled by it in the same way that I am with O’Connor’s belief that livability improvements should be abandoned because they can gentrify an area. As I’ve argued before, it’s up to San Francisco’s political class to find a way to maintain the city’s affordability and diversity and balance that against its relentless economic development promotion.

After all, McMahan is a single mother of modest means, and the fact that she has an opportunity to start a business based on her sense of style and network of contacts with artists should be a good thing for San Francisco. She and Weham went through The Women’s Initiative training program to learn about operating a small business, getting a loan to open through its Working Solutions affiliate.

“Since 1988, Women’s Initiative has been assisting high-potential low-income women who dream of business ownership,” reads a description on its website, noting that 99 percent of participants are low-income women and 78 percent are women of color. Combine that with McMahan and Wehman’s artistic roots in the Burning Man world — and the need for artists to have outlets to sell their works here — and it’s hard to imagine a business that is more quintessentially San Francisco than this one.

“This store represents our take on aesthetics and our mutual love for all things previous and peculiar. It also gives us the opportunity to showcase the incredibly talented artist communities we’re fortunate to be a part of, while keep the pricing at an affordable level throughout the store,” McMahan says in a press release announcing the recent opening of Carousel SF.

Will this cool new business attract other ones near it? I’m sure they hope so. Will that begin to cause Mission Street to go the way of that parallel universe a block away on Valencia, with rising rents and the calls for livability improvements that inevitably follow? I sure hope not. But our challenge now is to facilitate the dreams of low-income women who strive to be small business owners while ensuring that they can remain welcome and stable in the neighborhoods that they’re helping to improve.

Supes scramble to find TIC deal

Zelda Bronstein
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158
Supes scramble to find TIC deal

Some San Francisco supervisors are scrambling to find an acceptable compromise that would prevent condo-conversion legislation by Sups. Scott Wiener and Mark Farrell from becoming a bitter battle that could be a no-win situation for centrists.

Board President David Chiu is meeting with tenant groups and trying to craft an alternative to the proposal, which would allow some 2,000 tenancy in common units to convert to condominiums. Wiener says the legislation is needed to provide housing stability to people in the almost-but-not-quite-a-condo world of TICs. Tenant activists who have met with Chiu say he’s discussing ways to limit speculation, which might include a five-year ban on the resale of converted condos. But that won’t be anywhere near enough for the tenant groups.

In fact, tenant and landlord groups are both talking to Sup. Norman Yee, who will be one of the swing votes, and who could introduce a series of amendments to the Wiener/Farrell bill that would be more palatable to tenants.

“They’ve had a couple of meetings,” Yee told me. “We’re just examining the issues to see if there’s a compromise. It would be great if we could work something out so the supervisors could feel better about voting on this.”

But any deal, Ted Gullicksen of the San Francisco Tenants Union told me, would require “structural reform of the future condo-conversion process.”

Yee could probably get away with that — he’s never relied on landlords or real-estate interests for his campaign money, and there aren’t that many TIC owners in his district, which is largely single-family homes. This won’t be a vote that will make or break his future in District 7.

On the other hand, it could be a huge issue for Sup. London Breed, who represents a district with a huge majority of tenants and the most progressive voting record in the city. Breed insists that she hasn’t made up her mind on the issue, and she told me she agrees she’s on the hot seat here: Much of her political and financial support came from Plan C and real-estate interests that want more condo conversions, but she would face furious policial fallout if she voted against tenants. “I am open to a compromise, but only if it’s good policy for the city,” she said.

Supervisors David Campos and John Avalos are strongly against the TIC bill, and it’s likely that Sups. Eric Mar (who got immense support from tenants in his recent re-election) and Jane Kim (who didn’t support the measure in committee) will oppose it unless it’s altered in a way that tenants can accept.

Naturally, Farrell and Wiener are on the yes side, as is, almost certainly, Sup. Carmen Chu.

That leaves Breed, Chiu, Yee, and Sup. Malia Cohen — and three of them have to vote Aye for the bill to pass. Chiu wants to run for state Assembly from the tenant-heavy side of the city, but, as always, he’s looking for a way to avoid an ugly fight.

The problem is that the tenants aren’t going to sign off on anything modest; if they’re going to accept the conversion of 2,000 units that used to be rental housing, they’re going to want to be absolutely certain it doesn’t happen again — and that there are new rules in place that halt the rampant assault on existing rent-controlled housing.

So either the folks in the center — Yee, Breed, Chiu, and Cohen — are going to have to force the landlords to accept some long-term reforms that they won’t like, or politicans like Breed are going to be forced to take a yes or not vote that could come back to haunt them.

 

 

 

 

No sympathy for TICs

Zelda Bronstein
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153
No sympathy for TICs

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.

 

Editor’s notes

Andrew Lam
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97

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.

Was it a great year?

Zelda Bronstein
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149
Was it a great year?

At noon Dec. 19, a group of about 50 housing activists led by the Housing Rights Committee gathered at 18th and Castro, next to the giant Shopping Season Tree, to discuss the wave of evictions tenants are facing at the end of 2012. Tommi Avicolli Mecca held up a list of 26 buildings that are currently being clear of tenants under the Ellis Act, a state law that allows landlords to evict all their tenants and sell the property as a single-family home or tenancies in common. With him was a long line of tenants who are facing holiday homelessness thanks to landlord greed.

“There are too many tenants being evicted to fit in front of the tree,” he said.

We heard story after story: A man living with AIDS facing the loss of his home after 17 years. A family being forced out after 18 years. Seniors, kids, disabled people … all of them almost certainly displaced from San Francisco.

“San Francisco is becoming a city of the rich, and we are being pushed aside,” said Lisa Thornton, who works at Rainbow Grocery and is losing her home.

“This,” Mecca said, “is an epidemic of evictions.”

And we all know why: As the second tech boom roars in to San Francisco, high-paid young workers are able to afford to buy TICs or single-family homes, and long-term rent-control-protected tenants simply can’t compete. It’s not a pretty pciture.

So I almost barfed when I say Randy Shaw’s glowing paen to Mayor Ed Lee. “San Francisco had one of its greatest years in 2012, as the city’s job growth and vibrancy outpaced nearly everywhere else,” he wrote.

Oh, gee, he says, there are some problems:

Few want San Francisco to become a city where only the rich and subsidized poor can live. But these same fears were felt in the 1980’s. When I was moving to San Francisco in 1979, the lines for vacant apartments were just as long and the competition for vacant units as fierce as what we read about in 2012. We couldn’t believe we had to pay $375 for a Mission one bedroom apartment, a rate that is less than half the cost of an SRO room without private bathroom today. San Francisco has long been an expensive city that keeps getting pricier.

So what — because we were worried about displacement in the 1980s means we shouldn’t be worried today? Those worries were real — gentrification of San Francisco neighborhoods has been rampant for decades. It’s changed the city, for the worse.

In the 1980s, Shaw was part of a broad coalition that fought to get rent control laws and eviction protections and limits on condo conversions. Now he’s acting as if none of that was worth the fight, as if protecting affordable housing wasn’t, and isn’t, the most critical issue in the city today.

A great year? Fantastic vibrancy and job growth? Not if you’re one of the growing numbers of people who are losing their homes to Ed Lee’s vision of economic development.

 

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