| A New Path to Possible Condo Conversion for your TIC | January 26th, 2008 |
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Following is an article from this week’s San Francisco Business Times: Activists Push to Junk Condo Conversion Lotto Amid surging demand to convert San Francisco residences to condominiums, two political groups are pressuring city lawmakers to raise the annual limit on conversions or abolish it altogether. The groups, which lobby on housing issues — Plan C San Francisco and the San Francisco TIC Coalition — will kick off their campaign Feb. 6 during the city’s annual condo conversion lottery. The city uses a lottery to determine who can convert housing units to condos and since 1994 has capped the number at 200 each year. Lottery entrants who don’t win may register again and are entitled to additional tickets for losing years. Would-be homeowners have argued that the cap should be lifted or scrapped. Plan C and the TIC Coalition are hoping to draw renewed attention to their issue with a rally at City Hall and by organizing an estimated 6,000 TIC owners citywide to pressure the Board of Supervisors. “These are all good San Francisco citizens who are just looking to stay here and be homeowners,” said Radhi Ahern, a member of the San Francisco TIC Coalition and real estate broker. “There is so much negativity put upon loss of rental stock whereas we never see the human side of families trying to stay in San Francisco (as homeowners).” The two housing groups point out that the applicant pool for conversions continues to rise, meaning longer waits and lower odds of being selected in the lottery. The number of units applying for conversion has risen 75 percent since 2003 to 1,736 last year. The condominium conversion process generally proceeds like this: Apartment buildings or duplexes first become so-called “tenancies in common” where renters buy their units or new buyers occupy those units. TICs are risky financial arrangements because the building’s tenants jointly own the building, meaning if one owner defaults the other owners must make up the difference. The resale value of TICs also is generally lower than that of condominium units. TICs enter the city’s condo lottery to convert to condominiums, a less risky investment in which each unit is individually owned and has its own mortgage. Homeowner groups argue that allowing more condominium conversions would be a welcome development for many first-time home buyers in a city where one-third of the population owns a home, well below the national average. The Plan C and TIC Coalition efforts likely will run into strong opposition. Tenants’ rights groups said they fear eliminating the condo conversion cap will lead to spikes in evictions of renters to make way for wealthier people who can afford to buy. “It’s definitely important to maintain (the cap),” said Ted Gullicksen, a spokesman for the San Francisco Tenants Union. Recent legislation has favored tenant activists. City supervisors passed legislation in 2006 that blocks condo conversions if property owners evicted someone who is elderly, disabled or seriously ill. Meanwhile, past efforts to allow some property owners to avoid the lottery have failed. In 2005, supervisors killed proposed legislation that would have allowed two- to six-unit tenancies in common that were occupied by their owners to turn their units into condominiums without going through the lottery. The sponsor of that proposal, Supervisor Michela Alioto-Pier, estimated it would have affected less than 1 percent of the housing stock in the city. |
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As more and more San Franciscans become TIC owners, they are becoming a collective force to be reckoned with. I wouldn’t hold my breath – but I estimate that 5-10 years out TIC homeowners will become such a large bloc of voters that they will be able to significantly influence changes in our current rent control and condo-conversion laws in San Francisco–