TICs

Landlord plaintiff in eviction fee case has history of tenant law violations

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San Francisco landlord attorneys filed a lawsuit on Thursday against San Francisco and five tenants in an effort to overturn Sup. David Campos’ new law requiring higher relocation assistance payments to tenants evicted under the Ellis Act, but the main plaintiff in the case may not be the helpless victim the suit purports him to be.  

Under the recently implemented measure, landlords must now pay the difference between their tenants’ current rent and the cost of “comparable” units for two years, as determined by the City Controller’s Office. Though many property owners haven’t been deterred by the measure, as evidenced by the Ellis Act evictions that continue to sweep the city, a group of landlords and their attorneys filed a lawsuit (Jerrold Jacoby et al. v. City and County of San Francisco, et al.) claiming the new law is unjust.

“The city has tried to change the rules on them,” said attorney Andrew Zacks, who represents the plaintiffs. “We don’t think that is allowed under the law.”

Jacoby, the lawsuit’s main plaintiff, is an 80-year-old property owner who, according to tenant attorney Joseph Tobener, is a “slumlord” who has mistreated his tenants and failed to adequately maintain his valuable rental property.

“He is in the business of landlording. That is all he does,” Tobener, who represents three of the five tenants being sued in the lawsuit, told the Guardian. “The lawsuit against the City only used Jacoby as plaintiff because he is a senior…They think this guy Jacoby, a slumlord, is a perfect plaintiff, but they misrepresent this story in their complaint.”

One of Tobener’s clients, Judith Barrett, is a 62-year-old single mother who teaches English at Galileo High School in San Francisco. She has lived in her current unit for 25 years, and she lives paycheck-to-paycheck.

Barrett, who Jacoby recently evicted using the Ellis Act, has been involved in protracted legal proceedings with her landlord in the past. Tobener said Jacoby and unit co-owner Jeanmarie Hryshko (Jacoby’s ex-wife) have collected more than $22,500 in illegal rent since October 2009, according to a ruling by the San Francisco Rent Board. That’s just the tip of the iceberg, according to Tobener, who said there was “much more prior” but that it extends beyond the statute of limitations.

Using a clause in the San Francisco Rent Board’s regulations, Jacoby claimed “financial hardship” when sued by Barrett over the illegal rent collection. “He tried to file a hardship exemption for the $22,500 at the Rent Board and he lost,” said Tobener, who also noted that Jacoby and Hryshko still owe Barrett an additional $8,000 because they executed the eviction before the reduced rent could cover the landlord’s debt to his tenants.

Barrett’s eviction, according to Tobener, was prompted by a lawsuit filed by tenants that claimed the landlords wouldn’t make “even the most basic repairs to the subject unit.” The lawsuit, which is still pending, claims that Jacoby and Hryshko have saved hundreds of thousands of dollars over the years, though they have an equity of $1.8 million on the two-unit property.

“That’s flat out untrue. There is a chronology that completely undercuts Mr. Tobener’s statement,” Zacks said, noting that aggressive moves by the tenants—specifically ”legal threats” from Tobener—ultimately resulted in the Ellis evictions. “This is exactly why we have the Ellis Act and why it’s an important right for property owners. The notion that [Jacoby] should have to pay $100,000 to stop being a landlord is not only unfair, it’s illegal by state law.”

The “aggressive moves” in question are chronicled in Tobener’s letter to David Wasserman, an attorney involved in the case. Tobener believes Jacoby and Hryshko have no intention of living together, and that they instead hope to rid their debt by evicting their rent-controlled tenants.

“If we are successful in proving that your clients have ulterior motives or are retaliating against the tenants, we will then file a wrongful eviction action against your clients,” Tobener wrote. “By now, I am sure your clients have wrongful eviction insurance. Perhaps they take comfort in the protections this insurance will provide them should they lose their unlawful detainer bid. But, what your clients may not know is that their insurance policy will not cover our largest seam of gold — the treble-damages penalties under the San Francisco Rent Ordinance for wrongful eviction.”

In the event of an unfavorable ruling, Zacks said he and his client don’t plan to remain complacent. “If the local judge agrees with the city,” he said. “We will appeal.”

Indeed, could be just the beginning of epic court battles between landlord and tenants advocates in San Francisco, where the hot housing market has triggered an eviction epidemic. The November ballot includes a tax on real estate speculation, which landlord groups have already threatened a lawsuit to challenge.

“Ellising a two-unit building is a real estate speculation play,” Tobener told the Guardian. “They are going to remodel and sell as TICs [tenants-in-common] to wealthy new owners. They cannot re-let the units, so they have to remodel and sell.”

 

SF bankers now exporting tenant-displacing TIC loans

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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.

Solving the housing crisis takes all San Franciscans, even big tech

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By Joseph Tobener

 

OPINION This week, San Franciscans learned that they will not be able to rely on Sacramento to fix the housing crisis. State lawmakers voted down Senate Bill 1439, which would have stopped speculators from using the Ellis Act to evict and convert buildings to upscale offices and TICs. One Assembly Democrat said that San Franciscans were “exaggerating the problem.” That same day, my office received Ellis Act eviction notices for 21 tenants from an artist building at 16th and Mission streets. The building has a new buyer, and it will soon be a high-end commercial space.

I was a tenant rights attorney during the first dot-com boom, and without question, this new housing crisis is much worse. The gentrification is more widespread and permanent. This time around, the evicted teachers, musicians, and artists are not simply moving down the street to smaller units, they are being priced out of San Francisco altogether.

We need to decide now, as San Franciscans, what we want our city to feel like in a decade. Here are five things I believe we need to do now to address the crisis:

1. Collaborate with tech leaders, rather than vilify them. I have been as guilty as the next person in blaming and berating big tech, ignoring the fact that many of my neighbors, clients, and friends are long-time San Franciscans who work in the tech industry. Enough blaming. We need to somehow bring tech to the table to help create large-scale solutions to the housing crisis. It may not be easy to do.

Earlier this year, Marc Benioff, the CEO of Salesforce, criticized tech companies for being “stingy” in giving to their communities, and I have heard nonprofit fundraisers echo this. If true, we need to find out why. On the other side, our healthy anti-corporate, ‘us and them’ mindset, which is deeply rooted in San Francisco’s political tradition, is not serving us in collaboratively addressing the housing crisis.

While there are a handful of high-profile examples of tech workers wrongfully displacing tenants, tech workers are not the real problem. It is true that tech money drives up prices, but the real villains are the predatory speculators who are profiting from our shared crisis. The bottom line is, like it or not, tech is here to stay, and tech leaders have the resources to fund the arts, help our schools, and yes, help us address the housing crisis.

2. Stop illegal mergers of multi-unit buildings into single-family mansions. It is not enough to have regulations in place to prevent mergers. Real estate speculators are merging units surreptitiously, without permits. The Department of Building Inspection needs to actively police projects. And all San Francisco residents need to share in the responsibility of ensuring that speculators are not doing major construction without permits in our neighborhoods.

3. Support legislation to stop landlords from renting their units as hotel rooms. It is estimated that more than a 1,000 units in San Francisco are being rented out full-time for short-term corporate or tourist use. We need a law to get these units back into the permanent housing stock.  

4. Donate to the Community Land Trust and the Community Arts Stabilization Trust. Community land trusts are buying property to permanently preserve residential housing and art space. We need to do more to support these organizations. Other cities do a much better job than San Francisco in partnering with corporations to preserve culture.  

5. Support an anti-speculation tax. Tenant activists have introduced an anti-speculation tax designed to stop real estate flipping. Our office sees the same LLCs flip properties time and time again.

Ultimately it is up to all San Franciscans to embrace this cause if we hope to preserve the diverse and complex character of our city. One thing is sure: We cannot wait to add our voices, or it will be too late.

Joseph Tobener is a tenant rights attorney.

Staying power

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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.)

Supervisors approve condo legislation with veto-proof majority

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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

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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

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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. 

A win for the tenants

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EDITORIAL In a stunning victory, tenant advocates have managed to derail a terrible piece of condo-conversion legislation — and replace it with a compromise that actually improves the current situation and could help slow the wave of speculative evictions.

The supervisors need to support the revised version of the bill — and if Mayor Lee wants to have any credibility at all with tenants, he needs to sign it.

For some 30 years, San Francisco has had a strict policy limiting the conversion of rental apartments to condominiums. Only 200 units a year get permission, through a lottery.

But thanks to the popularity of tenancies in common (a backdoor way around the limit) and the state’s Ellis Act, which allows landlords to evict all their tenants and sell the units as TICs, there’s now a long waiting list.

TIC owners say it’s unfair that they have to accept (somewhat) higher mortgage payments and reduced value on their homes because the wait for a conversion permit has grown to ten years or more. Real-estate speculators see huge profits in clearing buildings of long-term tenants with rent-controlled apartments and selling the places as TICs.

When Supervisors Scott Wiener and Mark Farrell first proposed allowing more than 2,000 tenancy-in-common units to bypass the lottery, tenant advocates began organizing to defeat the bill. Nobody thought a compromise was possible — particularly when the landlord-backed Plan C refused to negotiate in good faith and look for a solution everyone could accept.

But with the help of Supervisors Norman Yee, Jane Kim, and David Chiu, the tenants were able to craft a deal that clears up the backlog — and then prevents any further conversions for at least a decade. That’s fair: If the limit is 200 a year, and TIC owners want to clear up a backlog of 2,000 all at once, a ten-year moratorium makes sense. The tenant package also bars conversion of any buildings with more the five units and includes more protections for existing tenants.

If this proposal is really about helping TIC owners who face a long and uncertain time on the conversion list, then the compromise ought to be fine — and indeed, many TIC owners support it. The real-estate speculators who want to see evictions continue at a rapid pace hate it — this would make TICs less appealing and less valuable. But that’s fine: Buying a TIC has never been, and should never be, based on a future promise of condo conversion. And if this slows down the horrifying epidemic of evictions and displacement, it will be a very positive change.

Wiener and Farrell didn’t accept the compromise, but it was amended into their legislation anyway. The new version will come before the supervisors May 7. The supervisors should see this for what it is — greedy speculators against everyone else — and vote yes.

You want scary? We’ve got an eviction map

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You want to see something frightening on a lovely afternoon? Check out this amazing interactive map of Ellis Act evictions in San Francisco put together by Brian Whitty.

It’s stunning: Between 1997 and 2013, it seems as if most of the Mission, Noe Valley, North Beach, the Marina, and Potrero Hill was evicted. Hundreds and hundreds of apartments turned into TICs, which now want to convert to condos. Hundreds and hundreds of tenants, who once had rent-controlled apartments, losing their homes — and given the price of housing, losing their ability to live in San Francisco.

Each little red flag is a human tragedy. Each one represents a transforming city that no longer has room for the middle class, much less poor people. It makes we want to cry. Or throw up. Or something.

The Chron gets the condo deal wrong

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It’s kind of a surprise that the Chron actually likes the (possible) condo conversion deal. That paper typically opposes anything that is good for tenants and supports anything that the landlords like. But it’s annoying that the editorial writers made it sound as if Sups. Scott Wiener and Mark Farrell engineered this whole thing. You need to get beyond the silly paywall to read the full editorial, so I’ll reproduce the key part here:

This week a deal may be struck to end the stalemate. A plan by Supervisors Mark Farrell and Scott Wiener will give owners of tenancies in common the chance to convert under a one-time deal. The yearly lottery will be suspended, the apartment owners will pay from $4,000 to $20,000 each into a subsidized housing fund, and those in the conversion pipeline can go forward. It’s essentially a one-time offer with the lottery system swinging back in place in 10 years.

Actually, Farrell and Wiener weren’t the ones who came up with the proposal that might make this legislation possible. That work was done by tenant and housing advocates — Sarah Shortt of the Housing Rights Committee, Ted Gullkicksen of the Tenants Union, Peter Cohen from the Council of Community Housing Organizations, Gen Fujioka of CCDC — and Sups. Norman Yee, Jane Kim, and David Chiu. The landlord group Plan C didn’t make any effort to negotiate anything in good faith, so the tenant and housing people went and put this together on their own.

It was never included in the Wiener/Farrell bill; if anything, it was prepared as a hostile amendment. Realizing that, with Yee on the side of the tenants, there wouldn’t be six votes for their original plan, Wiener and Farrell had no choice but to accept the tenant alternative.

A lot of hard work, and a lot of give-and-take was involved — but the credit for that goes first and foremost to the activists who fought the original Wiener-Farrell proposal. Let’s be fair here.

Proposal would halt condo conversions for ten years

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

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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.

Condo conversion compromise in the works despite Realtors’ resistance

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[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

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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

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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?

Live Shots: Tomahawk at the Great American Music Hall

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Tomahawk gave two rare live performances this weekend at the Great American Music Hall, the second of which this photographer attended, and — as to be expected from most things involving Mike Patton — it was flawless, aggressive, and there were lots of dudes in the crowd.  

The night started interestingly enough, waiting in line behind Jello Biafra at will-call and hearing him give his name to the woman behind the glass, while a few people behind me whispered, “that’s Jello Biafra.”  I don’t think he remembered me, but he stepped on me during the last Melvins show I photographed at GAMH. That time, I looked up and he said, “sorry” and I was like, “awesome.” 

Anyway, back to the show. Aside from a stricter than usual photo policy forcing me up into the balcony (there was no way I was pushing up front, Patton fans worshippers are rabid), it was spectacular. Tomahawk opened with “Mayday,” from Mit Gas, Patton quickly emerging from behind his computer and drum machines and charging towards the crowd, whipping it up and still giving plenty of attention to the band, often turning to face drummer, John Stanier, to whom he remained precisely, rhythmically locked all night.

The band maintained the same level of energy throughout most of the show, with the occasional pause to simultaneously admonish the audience and make sure everyone was having fun. One audience member who made the mistake of having his iPad out during the show, presumably to take a photo, clearly provoked Patton’s ire, and was called a “fucking idiot” from the stage and told to “put it back in his man purse.”

The set included a healthy dose of songs from every album, culminating in a highly energetic performance of “Laredo,” in which Patton used the repeating line “The cat’s in the bag and the bag’s in the river” to showcase the full range of his vocal, tics, growls, and whispers.

The group returned to the stage for two encores, the first being the jazzy “Rise Up Dirty Waters” off of its new album, appropriately titled Oddfellows. Duane Denison remarked that he was nervous to play this one, as it had not been performed live before, but they all seemed to nail it, with Trevor Dunn’s walking bass line and the Lynchian vocal-guitar melody putting what many thought was a quiet cap on the night.

But no, Tomahawk returned to the stage again, this time Patton in a hockey mask, the eyehole of which he fed his microphone through and proceeded to blast into Bad Brains’ “Pay to Cum” and “How Low Can a Punk Get.”

Vocally, he was a pretty convincing HR and although he didn’t do any backflips, he did manage to get a few stage-dives in, much to the chagrin of security who immediately found themselves engaged in a tug-of-war, Patton as the rope, against the crowd. It was an exciting end to a highly entertaining show. Also, props to the guy that jumped off the balcony on to the speaker stacks.

Setlist:

Mayday

Flashback

Oddfellows

101 north

Stone Letter

Birdsong

Rape This Day

Honeymoon

Capt Midnight

White Hats

God Hates a Coward

IOU

Rotgut

Southpaw

Point and Click

Laredo

Encores:

Rise Up Dirty Water

Pay to Cum

How Low Can a Punk Get

 

Supes scramble to find TIC deal

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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.

 

 

 

 

Two good questions for Mayor Lee

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UPDATED When Mayor Ed Lee appears before the Board of Supervisors this afternoon (Tues/12) for the voter-mandated monthly “Formal Policy Discussions” (aka Question Time), he will be asked a couple of good, relevant questions with no easy answers. This is exactly what voters and progressive supervisors intended, a serious policy discussion, rather than sterile, hollow ritual that our current crop of politicians have turned it into.

The first question is by Sup. Eric Mar, who asks, “The Municipal Transportation Agency recently released its Draft Bicycle Strategy, which lays out an aggressive plan to upgrade San Francisco’s bicycle facilities. It supports biking for everyone, including seniors, families, and persons with disabilities. However, I am hearing growing concerns both in my district and city-wide about the mismatch between verbal commitments to better bicycling and budget realities. Currently, bicycle projects account for just 0.46 percent of all MTA capital. This is not enough to get us to the goals laid out in the Bicycle Strategy. How will you fund the Bicycle Strategy to make San Francisco a national leader in bicycling safety and use?”

Great question! This report, which came out in December, has the modest, realistic goal of increasing the share of vehicle trips taken by bike from 3.5 percent last year up to 8-10 percent by 2018. That already seems to abandon the official city goal – heavily touted by Lee and Board President David Chiu – of 20 percent by 2020. But even this new plan isn’t fully funded, so the question is simply asking the mayor whether he will put his money where his mouth is.

The second question comes from Chiu, who is trying to find a way to mediate the very real and challenging dispute between the city’s renters and those trying to convert more apartments into condos. Understanding where Lee stands on the issue is important to solving this problem, and Chiu’s question seems to genuinely seek guidance from the chief executive.

He asks, “Mr. Mayor, the Board of Supervisors is considering legislation to allow existing owners of Tenancies in Common (TICs) to bypass the condominium conversion lottery and be converted after the payment of a fee. I recently asked supporters of the legislation and tenant advocates to engage in negotiations, which Supervisor Farrell and I are hosting.

“What is your position on this pending legislation? 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 TIC 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?”

Again, excellent questions that go right to heart of one of the central struggles facing this city: Who gets to live here? And given Lee’s role in relentlessly promoting taxpayer-subsidized economic development strategies that are gentrifying the city and fueling this clash, one could argue that he has a moral obligation to help find a solution to this problem, or at the very least to say where he stands so voters can judge him accordingly.

Mayor Lee received these questions last week, so he and his staff have had plenty of time to think about them and prepare real, substantive answers. Will we get real answers or just the normal political platitudes that kick the can down the road in dealing with these pressing problems? We’ll see. Tune in at 2 pm to SFGOVTV to watch yourself, or check back here later and I’ll tell you what Mayor Lee said.

4PM UPDATE: And the winner is…meaningless political platitudes, misleading data, and shameless fence-sitting.

“I can’t say that I have a magic solution to this issue that will make everyone happy,” was how Mayor Lee answered Chiu’s question about the condo lottery bypass legislation, after saying he understood the positions of TIC owners who want to convert to condos and tenant groups concerned about the loss of what he called “the precious few rent-controlled units.”

Lee said he hopes that the two sides can find a “consensus solution” to the problem, which seems to indicate that he does indeed believe in magic considering the diametrically opposed viewpoints of the two sides and the zero sum game this issue represents. Afterward, I told the mayor that he didn’t seem to take a position on the issue and asked him to elaborate on what should be done, and he maintained that, “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.”

Yet when KCBS reporter Barbara Taylor tried to help discern what that position may be, asking whether we could at least say that Lee didn’t support the legislation in its current form, he wouldn’t even agree to that weak stance. No, his position was that both sides have good points, even though they’re opposing points, and he’s hoping for the best. Next question.

Lee didn’t provide a clear or responsive answer on the bike question either. He reiterated his support for cycling improvements and said, “SFMTA’s prime responsibility is to ensure the streets are safe for all San Franciscans, and that includes bicyclists.” And he tried to dispute Mar’s point about how less than a half of 1 percent of the agency’s capital budget goes to bicycling improvements.

“To look at the percentage might not tell the whole story,” Lee said, citing how the SFMTA and the Transbay Joint Powers Authority are now seeking about $40 million in state and federal grants for transportation projects that would include cycling infrastructure improvements.

And that might have seemed like a somewhat responsive answer to the casual listener who isn’t aware that the price tag for improvements identified in the SFMTA Bicycle Strategy total about $200 million, of which the agency has only identified about $30 million in available funding. So the question of “How will you fund the Bicycle Strategy?” remains unanswered.

Perhaps it was too much to expect straight answers from a politician.

No sympathy for TICs

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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.

 

Out of place

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news@sfbg.com 

In his State of the City address last week, Mayor Ed Lee cheerfully characterized San Francisco as “the new gravitational center of Silicon Valley.” He touted tech-sector job creation. “We have truly become the innovation capital of the world,” Lee said, “home to 1,800 tech companies with more than 42,000 employees — and growing every day.”

From a purely economic standpoint, San Francisco is on a steady climb. But not all residents share the mayor’s rosy outlook. Shortly after Lee’s speech, renowned local author Rebecca Solnit published her own view of San Francisco’s condition in the London Review of Books. Zeroing in on the Google Bus as a symbol of the city’s housing affordability crisis, she linked the influx of high-salaried tech workers to soaring housing costs. With rents trending skyward, she pointed out, the dearth of affordable housing is escalating a shift in the city’s cultural fabric.

“All this is changing the character of what was once a great city of refuge for dissidents, queers, pacifists and experimentalists,” Solnit wrote. “It has become increasingly unaffordable over the past quarter-century, but still has a host of writers, artists, activists, environmentalists, eccentrics and others who don’t work sixty-hour weeks for corporations — though we may be a relic population.”

LIMITED OPTIONS

The issue of housing in San Francisco is highly emotional, and there is perhaps no greater flashpoint in the charged debate than Ellis Act evictions.

When the housing market bounces upward, Ellis Act evictions tend to hit long-term tenants whose monthly payments, protected by rent control, are a comparative bargain. Even if they’ve submitted every payment on time and upheld every lease obligation for 20 years, these renters can find themselves in the bind of being forced out.

And they don’t just lose their homes; often they lose their community. San Francisco has become so expensive that many Ellis Act victims are tossed out of this city for good.

Enacted in 1986, the state law allows a landlord to stop renting units, evict all tenants, and sell the building for another purpose. Originally construed as a way for landlords to “go out of business” and move into their properties, the Ellis Act instead gained notoriety as a driving force behind a wave of evictions that slammed San Francisco during the tech boom of the late 90s. Between 1986 and 1995, just 29 Ellis evictions were filed with the San Francisco Rent Board; in the 1999-2000 fiscal year alone, that number ballooned to a staggering 440.

Under the current tech heyday, there are indications that Ellis Act evictions are gaining fresh momentum. The San Francisco Rent Board recorded 81 this past fiscal year, more than double that of the previous year, and there appears to be an upward trend.

TIC CONTROVERSY

Buildings cleared via the Ellis Act are typically repackaged as tenancies-in-common (TIC), where several buyers jointly purchase a multi-unit residence and each occupy one unit. Realtors often market TICs as a path to homeownership for moderate-income individuals, creating an incentive for buyers to enter into risky, high-interest shared mortgages in hopes of later converting to condos with more attractive financing.

The divide between TIC owners and renters came into sharp focus at a contentious Jan. 28 hearing, when a Board of Supervisors committee met to consider legislation that would allow some 2,000 TIC units to immediately convert to condos without having to wait their turn in a requisite lottery system.

One TIC owner said he was financially burdened, but had only entered into the arrangement because “I wanted to stay here and raise my family, but we couldn’t afford a single family home.” Yet tenants brought their own set of concerns to the table, saying the temptation to create TICs was putting a major dent in the city’s finite stock of rent-controlled units — the single greatest source of affordable housing in San Francisco.

“My feeling is, let’s stop doing TICs,” Tommi Avicolli Mecca, a tenants right activist with the Housing Rights Committee, told the Guardian following the hearing. “The city has to just start making sure that the condos that are built are the kind of thing [TIC buyers] can afford. Instead, we cannibalize our rental stock? That’s a reasonable way? You evict one group of people to house another: How does that make sense?”

The grueling five-hour hearing illustrated the sad fact that San Franciscans in a slightly better economic position were being pitted against economically disadvantaged renters. The two groups were bitterly divided, and all seemed weary, furious, and frustrated by their housing situations.

The condo-conversion legislation, co-sponsored by Sups. Scott Wiener and Mark Farrell, did not move forward that day. Instead, Board President David Chiu made a motion to table the discussion until Feb. 25, to provide time for “an intensive negotiation process.” Chiu, who rents his home, added: “While I myself would like to become a homeowner someday … I do not support the legislation in its current form.”

Sup. Jane Kim sought to appeal to the tenants as well as the TIC owners. “It’s very tragic that we have set up a situation where [TICs and renters] are pitted against one another,” she said. She hinted at what a possible alternative to might look like. “We should be looking at a ban of scale,” she said. “If we allow 1,800 potential units to go thru this year, are we willing to do a freeze for the next 8 to 10 years?”

It’s unclear what will happen in the next few weeks, but if this legislation makes it back to the full board in some form, the swing votes are expected to be Sups. London Breed, Malia Cohen and Norman Yee.

CASH OR EVICTION?

New protections were enacted following the late-90s frenzy to discourage real-estate speculators from using the Ellis Act to turn a profit on the backs of vulnerable seniors or disabled tenants. Yet a new wave of investors has discovered they can persuade tenants to leave voluntarily, simply by offering buyouts while simultaneously wielding the threat of an Ellis Act eviction. “The process got more sophisticated,” explains San Francisco Rent Board Deputy Director Robert Collins.

Once a tenant has accepted a check in lieu of eviction, rent-controlled units can be converted to market rate, or refurbished and sold as pricey condos, without the legal hindrances of an eviction blemish. Buyouts aren’t recorded with the Rent Board, and the agency has no real guidance for residents faced with this particular dilemma. “We don’t have the true number on buyouts,” says Mecca. “We don’t know how many people have left due to intimidation.”

Identity-wise, renters impacted by the Ellis Act defy categorization. A contingent of monolingual Chinese residents rallied outside City Hall recently to oppose legislation they believed would give rise to evictions; in the Mission, many targeted tenants are Latinos who primarily speak Spanish. From working immigrants, to aging queer activists, to disabled seniors, to idealists banding together in collective houses, the affected tenants do have one thing in common. When landlords or real-estate speculators perceive that their homes are more valuable unoccupied, their lives are susceptible to being upended by forces beyond their control.

The upshot of San Francisco’s affordability crisis is a cultural blow for a city traditionally regarded as tolerant, forward thinking, and progressive. In the words of Rose Eger, a musician who faces an Ellis Act eviction from her apartment of 19 years, “it changes the face of who San Francisco is.

Out of the Castro

By Tim Redmond

You can’t get much more Castro than Jeremy Mykaels. The 62-year old moved to the neighborhood in the early 1970s, fleeing raids at gay bars in Denver. He played in a rock band, worked at the old Jaguar Books, watched the rise of Harvey Milk, saw the neighborhood transform and made it his home.

He’s lived in a modest apartment on Noe Street for 17 years, and for the past 11 has been living with AIDS. Rent control has made it possible for Mykaels, who survives on disability payments, to remain in this city, in his community, close to the doctors at Davis Hospital who, he believes, have saved his life.

And now he’s going to have to leave.

In the spring of 2011, his longtime landlords sold the building to a real-estate investment group based in Union City — and the new owners immediately sought to get rid of all the tenants. Two renters fled, knowing what was coming; Mykaels stuck around. In September of 2012, he was served with an eviction notice, filed under the state’s Ellis Act.

He’s a senior, he’s disabled, his friends are mostly dead and his life is in his community — but none of that matters. The Ellis Act has no exceptions.

Mykaels spent a fair amount of his life savings fixing up his place. The walls are beige, decorated with nice art. Dickens the cat, who is chocolate brown but looks black, wanders in and out of the small bedroom. Mykaels has been happy there and never wanted to leave; “this,” he told me, “is where I thought I would live the rest of my life.”

There’s no place in the Castro, or even the rest of the city, where he can afford to move. Small studios start at $2,500 a month, which would eat up all of his income. There is, quite literally, nowhere left for him to go.

“A lot of my friends have died, or moved to Palm Springs,” he said. “But this is where my doctors are and where I’m comfortable. I’m not going to find a support system like this anywhere else in the world.”

Mykaels is the face of San Francisco, 2013, a resident who is not part of the mayor’s grand vision for bringing development and high-paying jobs into the city. As far as City Hall is concerned, he’s collateral damage, someone whose life will have to be upended in the name of progress.

But Mykaels isn’t going easily. The former web designer has created a site — ellishurtsseniors.org — that lists not only his address (460 Noe) and the names of the new owners (Cuong Mai, William H. Young and John H. Du) but the addresses of dozens of other properties that are facing Ellis Act evictions. His message to potential buyers: Boycott.

“Do not buy properties where seniors or the disabled have been evicted for profit by real estate speculators using the Ellis Act,” the website states.

Mykaels is a demon researcher — his site is a guide to 31 properties with 94 units where seniors or disabled people are being evicted under the Ellis Act. In some cases, individuals or couples are filing the eviction papers, but at least 14 properties are owned by corporations or trusts.

Mai told me that he knew a disabled senior was living in the building when he and his two partners bought it, but he said his plan all along was to evict all the tenants and turn the three-unit place into a single-family house. He said he hasn’t decided yet whether to sell building; “I might decide to live there myself.” (Of course, if he wanted to live there himself, he wouldn’t need the Ellis Act.)

Mai said he “felt bad about the whole situation,” and he had offered to buy Mykaels out. The offer, however, wouldn’t have covered more than a few months of market rent anyplace else in the Castro.

By law, Mykaels can stay in his apartment until September. If he can’t stave off the eviction by then, San Francisco will lose another longtime member of the city community.

 

Dark days in the Inner Sunset

By Rebecca Bowe

The living room in Rose and Willie Eger’s Inner Sunset apartment is where Rose composes her songs and Willie unwinds after playing baseball in Golden Gate Park. Faded Beatles memorabilia and 45 records adorn the walls, and a prominently displayed poster of Jimi Hendrix looms above a row of guitar cases and an expansive record collection.

It’s a little worn and drafty, but the couple has called this 10th Ave. apartment home for 19 years. Now their lives are about to change. On Jan. 5, all the tenants in their eight-unit building received notice that an Ellis Act eviction proceeding had been filed against them.

“The music that I do is about social and political things,” explains Rose, dressed from head-to-toe in hot pink with a gray braid swinging down her back. Determined to derive inspiration from this whole eviction nightmare, she’s composing a song that plays with the phrase “tenants-in-common.”

Cindy Huff, the Egers’ upstairs neighbor, says she began worrying about the prospect of eviction when the property changed hands last summer. Realtor Elba Borgen, described as a “serial evictor” in online news stories because she’s used the Ellis Act to clear several other properties, purchased the apartment building last August, through a limited liability corporation. The notice of eviction landed in the mailbox less than six months later. (Borgen did not return Guardian calls seeking comment.)

“With the [average] rent being three times what most of us pay, there’s no way we can stay in the city,” Huff says. “The only option we would have is to move out of San Francisco.” She retired last year following a 33-year stint with UCSF’s human resources department. Now, facing the prospect of moving when she and her partner are on fixed incomes, she’s scouring job listings for part-time work.

The initial notice stated that every tenant had to vacate within 120 days, but several residents are working with advocates from the Housing Rights Committee in hopes of qualifying for extensions. Huff and the Egers are all in their fifties, but some tenants are seniors—including a 90-year-old Cuban woman who lives with her daughter, and has Alzheimer’s disease.

Willie works two days a week, and Rose is doing her best to get by with earnings from musical gigs. Both originally from New York City, they’ve lived in the city 35 years. When they first moved to the Sunset, it resembled something more like a working-class neighborhood, where families could raise kids. The recent tech boom has ushered in a transformation, one that Rose believes “changes the face of who San Francisco is.” Willie doesn’t mince words about the mess this eviction has landed them in. “I call it ‘Scam-Francisco,'” he says.

The trio recently joined tenant advocates in visiting Sup. Norman Yee, their district supervisor, to tell their stories. Yee, who is expected to be one of the swing votes on an upcoming debate about condo-conversion legislation vehemently opposed by tenant activists, reportedly listened politely but didn’t say much.

As for what the next few months have in store for the Egers? “I can’t really visualize the outcome,” Rose says. “I can only visualize the day-to-day fight. And that’s scary.”

 

Fighting for a home in the Mission

By Tim Redmond

Eleven years ago, Olga Pizarro fell in love with Ocean Beach. A native of Peru who was living in Canada, she visited the Bay Area, saw the water and decided she would never leave.

Fast forward to today and she’s built a home in the Mission, renting a small room in a basement flat on Folsom Street. The 55-year-old has lived in the building for eight years; polio has left her wearing a leg brace and she can’t climb stairs very well, but she still rides her bike to work at the Golden Gate Regional Center. She’s a sociologist by training; the walls in her room are lined with bookshelves, with hundreds of books in Spanish and English.

The place isn’t fancy, and it needs work, but it’s hard to find a ground-floor apartment in the Mission that’s affordable on a nonprofit worker’s salary. Since 2011, when she moved in, she and her three housemates have been protected by rent control. And Pizarro’s been happy; “I love the neighborhood,” she told me.

The letter warning of a pending eviction arrived Jan. 16. A new owner of the building wants to turn the place into tenancies in common and is prepared to throw everyone out under the Ellis Act. There’s no place else in town for Pizarro to go.

“I’ve looked and looked,” she said. “The cheapest places are $2,500 a month or more. Maybe I’ll have to move out of the city.”

Pizarro’s building is owned by Wai Ahead, LLC, a San Francisco partnership registered to Carol Wai and Sean Lundy. I couldn’t reach Wai or Lundy, but their attorney, Robert Sheppard, had plenty to say. “San Francisco is going the way of New York,” he told me. “Manhattan is full of co-ops that used to be rentals, and lower-income people are moving to Brooklyn and Queens. That’s happening here with Oakland and further out.” He argued that TICs, like co-ops, provide home-ownership opportunities for former renters.

Sheppard, who for years represented tenants in eviction cases, said the Ellis Act is law, and America is a capitalist country, and “as long as there is a private housing market, there will be shifts of people as the housing market shifts.” He agreed that it’s not good for lower-income people to lose their homes, but “the poor will always be hurt by a changing economy. It’s called evolution.”

Pizarro told me she’s shocked at how expensive housing has become in the Mission. “It’s gotten so gentrified,” she said. “People show up in their BMWs. It’s starting to feel very isolated.”

She’s fighting the eviction. “I didn’t intend it to be this way,” she explained. “I just want to live here.” Lacking any family in the area, the Mission has become her community — “and I’m frustrated by the violence of how expensive it is.”

 

Affordability goes out of style

By Rebecca Bowe

Hester Michael is a fashion designer, and her home doubles as a project space for creating patterns, sewing custom clothing, weaving cloth, and painting. She’s lived in her Outer Sunset two-bedroom unit for almost two decades, but now she faces an Ellis Act eviction. Michael says she initially received notice last June. The timing was awful -– that same month, her husband passed away after a long battle with terminal illness.

“I’ve been here 25 years. My friends are here, and my business. I don’t know where else to go, or what else to do,” she says. “I just couldn’t picture myself anywhere else.”

Michael rents the upstairs unit of a split single-family home, a kind of residence that normally isn’t protected by rent control. Yet she leased the property in 1994, getting in under the wire before that exemption took effect. Since she pays below-market-rate rent in a home that could be sold vacant for top dollar, a target was essentially inscribed on her back when the property changed hands in 2004. That’s about when her long battle with the landlords began, she says.

From the get-go, her landlords indicated that she should look for a new place, Michael says, yet she chose to remain. The years that followed brought things falling into disrepair, she says, and a string of events that caused her feel intimidated and to fear eviction. Finally, she consulted with tenant advocates and hired an attorney. A complaint filed in superior court alleges that the property owners “harassed and retaliated [Michael] when she complained about the defective and dangerous conditions …telling [her] to move out of the property if she did not like the dangerous conditions thereat … repeatedly making improper entries into [the] property, and wrongfully accusing [her] of causing problems.”

Records show that Angela Ng serves as attorney in fact for the property owner, Ringo Chung Wai Lee. Steven Adair MacDonald, an attorney who represents both landlords and tenants in San Francisco housing disputes, represents the owners. “An owner of a single family home where the rent is controlled and a fraction of market has virtually no other choice but to terminate the tenancy,” MacDonald said when the Guardian reached him by phone. “They’ve got to empty it, and the only way to empty it is the Ellis Act.”

While Michael received an extension that allows her to remain until June 5, she fears her custom sewing business, Hester’s Designs, will suffer if she has to move. There’s the issue of space. “I have so much stuff in this house,” she says. And most of her clients are currently located close by, so she doesn’t know where her business would come from if she had to relocate. “A lot of my clients don’t have cars,” she says, “so if I live in some suburb in the East Bay, forget it. I’ll lose my business.”

The prospect of eviction has created a major dilemma for Michael, who first moved to San Francisco in 1987. While moving to the East Bay seems untenable, she says renting in San Francisco feels out of reach. “People are renting out small, tiny bedrooms for the same price as I pay here,” she says. With a wry laugh, she adds: “I don’t think there’s any vacant apartments in San Francisco -– unless you’re a tech dude and make seven grand a month.”

Editor’s notes

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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.

Norman Solomon: Verbal tics and political routines

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By Norman Solomon

Norman Solomon is co-founder of RootsAction.org and founding director of the Institute for Public Accuracy. His books include “War Made Easy: How Presidents and Pundits Keep Spinning Us to Death.” He writes the Political Culture 2013 column.

A lot of what we say and do becomes habit-forming. Groundhog Day 2013 could serve as a reminder that some political habits should be kicked. Here are a few:

**  “Defense budget

No, it’s not a defense budget. It’s a military budget.

But countless people and organizations keep saying they want to cut “the defense budget” or reduce “defense spending.”

Anyone who wants to challenge the warfare state should dispense with this misnomer. We don’t object to “defense” — what we do oppose, vehemently, is military spending that has nothing to do with real defense and everything to do with killing people, enforcing geopolitical control and making vast profits for military contractors. And no, they’re not “defense contractors.”

President Eisenhower’s farewell address didn’t warn against a “defense-industrial complex.”

The fact that there’s something officially called the Department of Defense — formerly the Department of War, until 1947 — doesn’t make its huge budget a “defense budget,” any more than renaming the Bureau of Prisons “the Bureau of Love” would mean we should talk about wanting to cut the “love budget.”

**  “Pro-life”

Last week, midway through a heated debate on the PBS “NewsHour,” the president of NARAL Pro-Choice America said that some politicians get elected while hiding their extreme anti-abortion positions — but would be rejected at the ballot box “if they ran on their pro-life values.”

“Pro-life” values? Not a label that abortion-rights advocates should use for opponents of a woman’s right to choose an abortion. One of the main reasons those opponents keep calling themselves “pro-life” is they want to imply that supporters of abortion rights are anti-life. Why help?

**  “Globalization”

In many realms, globalization can be positive, even essential. For instance, wonderful results flow from globalizing solidarity among workers around the world. Likewise, the planetary spread of awareness and cooperation among people taking action to protect the environment, stop human-rights abuses and end war.

Corporate globalization is another matter. Its destructive effects are lashing every continent with voracious commercialization along with exploitive races to the bottom for cheap labor, extraction of raw materials, privatization, flattening of protective tariffs, overriding of national laws that protect workers and replacement of democratic possibilities with the rule of big money.

Putting “corporate” before “globalization” may seem cumbersome, but it’s worth another three syllables. There’s a world of difference between globalization for human cooperation and corporate globalization. Blurring it all together misses the chance to clarify the distinct possibilities.

**  “Moderates”

Fifty-five years ago, in his book “The Causes of World War Three,” sociologist C. Wright Mills wrote about what he called “crackpot realism” — policy nostrums widely touted by mass media outlets and other powerful institutions as wisely reasonable, yet actually disastrous.

In a similar groove, these days, we hear about how certain elected officials are “moderates.” And we might refer to them that way ourselves. But the grim results of crackpot moderation — climate change and environmental degradation, incessant warfare, more poverty, widening economic inequities, abuse of civil liberties and so much more — are all around us. So-called “moderates” fuel the infernos of catastrophe.

What’s moderate about the extreme injustices and destructiveness of the status quo?

**  Skimming the headlines

We all do it sometimes — glancing at headlines and scarcely reading the stories — one of the reasons why, all too often, what we think we know actually isn’t so.

Case in point: a headline at the top of the New York Times front page days ago, no doubt leaving many quick readers with the belief that President Obama is getting tough on Wall Street.

Well, that’s what the headline conveyed. “SIGNAL TO STREET IN OBAMA’S PICK FOR REGULATORS,” it began, followed by an elaboration in big type just below: “A Renewed Resolve to Hold Financial Firms Accountable.”

Mostly focusing on the appointment of Mary Jo White to chair the Securities and Exchange Commission, the article offered a fleeting indication in its eighth paragraph that the “renewed resolve” might actually be wobbly. “While Ms. White is best known as an aggressive prosecutor,” the article noted, “she also built a lucrative legal practice defending Wall Street executives, a potential concern for consumer advocates.”

The basis for that potential concern, however, did not gain any further elucidation until the article’s twenty-sixth paragraph, which provided the other mention of why consumer advocates might be concerned: “Ms. White could face additional questions about her career, a revolving door in and out of government. In private practice, she defended some of Wall Street’s biggest names, including Kenneth D. Lewis, a former chief of Bank of America. As the head of litigation at Debevoise & Plimpton, she also represented JPMorgan Chase and the board of Morgan Stanley.”

So much for headlines

Norman Solomon is co-founder of RootsAction.org and founding director of the Institute for Public Accuracy. His books include “War Made Easy: How Presidents and Pundits Keep Spinning Us to Death.” He writes the Political Culture 2013 column.

Housing stability for all

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OPINION San Francisco is in the midst of a housing affordability crisis. It’s way too expensive to live here, and for those fortunate enough to have housing they can afford, we need to provide stability. This need for housing stability applies to renters as well as homeowners. If we’ve learned anything from the foreclosure crisis, homeowners are not all rich, and they are not all stable in their housing.

Last week’s Guardian argued against legislation I’m co-sponsoring, which provides one-time relief to owners of tenancies-in-common (TICs) — mostly middle- and working-class first-time homeowners who reside in their units — while providing strong protection to renters. While the editorial correctly stressed the need to support rent control, it failed to acknowledge the need to support housing stability for homeowners as well.

Rent control is one of the pillars of our city. It stabilizes housing prices, recognizes that housing isn’t just another commodity, keeps communities intact, and helps maintain San Francisco’s diverse fabric. I’ve long supported rent control, as reflected by my voting record. I supported a series of rent control measures designed to reduce evictions, including requiring sales disclosure of a unit’s eviction history, requiring increased relocation benefits to evicted tenants, outlawing harassment of tenants, and restricting use of the Ellis Act by real-estate speculators. As a member of the Board of Supervisors, I authored successful legislation to ban conversion of rent-controlled units to student dorms and to provide temporary affordable units to renters displaced by disasters.

The current legislation I’m co-sponsoring will provide needed relief to struggling TIC owners, many of whom are experiencing serious financial distress, while protecting the small number of tenants who live in these units. TIC owners have group mortgages, meaning that if one owner defaults, all owners default. They pay double the interest rate other homeowners pay and usually cannot refinance. The legislation will allow them to convert their units to condos and obtain their own mortgages, at lower rates and less foreclosure risk.

While some caricature TIC owners as speculators and wealthy people, that’s untrue. Many TIC owners are quite middle class, former renters who scraped together a down payment to purchase a home. Many are teachers, social workers, public employees, and other workers who are anything but speculators. These are people who, if they didn’t own TICs, would be renting. They aren’t Martians who dropped out of the sky. They’re our neighbors, co-workers, and fellow San Franciscans. They are part of the city’s fabric.

Under the legislation, owner-occupied TICs that are in the condo lottery will be able to convert to condos by paying a fee of $20,000 per unit, with the proceeds dedicated to affordable housing. Buildings with Ellis Act and other problem evictions are typically prohibited from condo converting in San Francisco, under a 2006 law, and that restriction applies to this legislation. In other words, this legislation won’t encourage Ellis Act evictions. Moreover, buildings that aren’t owner-occupied can’t condo convert. Nor can buildings with more than six units. The legislation is one-time in nature and not an ongoing invitation to condo convert.

The legislation covers very few units with tenants — 85% are owner-occupied — and protects this small number of tenants by mandating they receive lifetime leases, with full rent and eviction controls identical to our rent control laws. This protection is stronger than what most tenants receive in buildings that win the condo lottery currently.

Renters and homeowners both deserve housing stability. This legislation moves us in that direction.

Supervisor Scott Wiener represents District 8.