Why I hope Sup. Farrell is wrong about condos

06.11.12 - 5:02 pm | Tim Redmond |

(213)

So Sup. Mark Farrell thinks the Board of Supervisors is ready to turn its back on the tenants movement and vote for legislation that would increase evictions, eliminate rental housing and undermine one of the most important pieces of tenant legislation to come out of City Hall in decades?

Gawd, I hope he's wrong.

From the Examiner:

Similar proposals have gone nowhere at City Hall. Farrell acknowledged it has been a “third rail,” but he suggested the political climate has shifted. “This is a different Board of Supervisors and this is a different time,” Farrell said.

Yeah, it's a different Board of Supervisors. Five years ago, the 8 Washington project would never have been approved in its current form. Five years ago, Ed Lee wouldn't have been elected mayor.

But I don't think this board is ready to abandon the tenant vote.

Making condo conversions easier is a huge deal. When San Francisco put a limit on condo conversions more than 20 years ago, it was a landmark law that put the preservation of affordable, rent-controlled housing over the needs of speculators. Over the past decade, the single greatest threat to tenants in this city is Ellis-Act evictions done to create tenancies in common. And the only check on more of that happening is the disincentive posed by the limits on condo conversions.

If Farrell gets his way, and TIC owners can bypass the conversion lottery, tenant organizations will be furious. There are, at best, five reliable pro-landlord votes on the board, so It's not going to happen without either David Chiu, Christina Olague or Jane Kim siding with Farrell. A lot of things suprise me in local politics, but that would be a shocker.

Comments

Nothing surprises me anymore

I'm betting on Jane "My time is NOW, dammit!" Kim.

Christina Olague has some real competition, and she's already done the mayor too many favors in exchange for her seat. If she does this, there will be hell to pay.

Same with Chiu. He waxes poetic about "shared progressive values," but the downtown clique can always count on him when it matters. Not this time, though. I think Peskin would step in at that point and mop the floor with him. I almost want him to do it, because that would be the end of his political career.

That leaves the one pseudo-prog who's not running for re-election this year -the hipster who takes a luxury jet to Burning Man. The real estate lobby is counting on you, Jane.

Posted by Greg on Jun. 11, 2012 @ 6:29 pm

>"I think Peskin would step

>"I think Peskin would step in at that point and mop the floor with him."

You have NO idea how despised Peskin is by everyone except the Telegraph Hill elite. You mention him to practically anyone and their first reaction is a look of disgust.

Even when Chiu and Peskin were on the same DCCC ballot Chiu got more votes.

Don't get me wrong, I want to see Peskin run also but only because I want to see him further humiliated. The concept that he could be termed out, then run the DCCC into the ground and then present himself as anything but a loser is laughable.

Posted by Troll on Jun. 11, 2012 @ 7:15 pm

Ellis#ed buildings can't be condo'ed anyway and so allowing

homeowners to bypass the lottery will have zero effect on the number of ellis act evictions, and therefore zero effect on evictions or rentals.

I wish you'd research your facts before spouting.

Anything that helps homeownership in the city is very popular, and this will also bring in more revenues for the city.

Posted by Guest on Jun. 11, 2012 @ 6:44 pm

Dont let my emotional

Dont let my emotional reactions get in the way of facts!

The sfbg is San Franciscos version of the tea party

Posted by greg on Jun. 11, 2012 @ 7:48 pm

More homeowners with greater

More homeowners with greater security in their ownership position will be good for San Francisco. Also the resulting conversion fees will be good for our affordable housing programs.

Posted by Guest on Jun. 11, 2012 @ 7:11 pm

$20,000 doesnt' buy much affordable housing

If you think the city should have more homeowners and fewer tenants, as the Chamber of Commerce does, that's fine. But don't hide behind affordable housing.

In a housing crisis, the cheapest affordable housing BY FAR is existing rent-controlled housing. Preserving it is far cheaper than replacing it, which costs hundreds of thousands of dollars a unit.

Posted by tim on Jun. 11, 2012 @ 8:16 pm

Compromise

Condo conversion fees are one, viable source of revenue to pay for affordable housing because it represents a *compromise* (not "hiding behind", as you put it) of so called competing interests.

Also, I definitely believe San Francisco should have more homeowners. Some of the TICs in question were purchased by former tenants - most of which are middle class people who could not afford the cost of a condo. They have a less secure ownership position making it more difficult to benefit from today's lower interest rates. After the conversion and subsequent refinance, the money they would be sending to banks can be spent in our local economy.

Posted by Guest on Jun. 11, 2012 @ 9:02 pm

Rent control actually reduces the amout of housing

available for rent because it confers irresistable incentives to convert to owner occupation. It also causes very little new build of rentals that aren't condo's because developers and owners worry that RC will be extended to cover newer buildings - nothing in CA law prevents the city from doing that.

Several thousand RC units vanish each year because the rules are too punitive on owners, and they aren't being replaced. Throw in Welch/Hestor type NIMBY'ism, which restricts new supply, and we can see that expensive housing is as much caused by liberals as by anything else.

I've personally converted two rental buildings to owner-occupation. The rules make that the obvious thing to do.

Posted by Guest on Jun. 12, 2012 @ 7:19 am

You are wrong about the

You are wrong about the ability to extend Rent Control. The Costa-Hawkins Act prohibits extending rent control to new construction. Perhaps just as important is that you, a landlord, did not know this and feared that SF would impose rent control on new units. I suspect even if SF weakened rent control, landlords would still be misinformed and afraid, causing bad investment decisions.

Posted by Guest on Jun. 12, 2012 @ 11:04 am

Huh? Where exactly in Costa-Hawkins does it prevent the SF

voters from changing the date of exempt units?

Chapter and verse. I think you're wrong. C-H limits the ability of RC to control condo's and SFH's but says nothing, AFAIK, about exempt dates.

In any event, the real point is that landlrods don't trust the system and, until that changes, you won't see new build of non-condo rentals.

Posted by Guest on Jun. 12, 2012 @ 11:19 am

I'm sick and tired of you

I'm sick and tired of you conman real estate flippers driving America into the ground.

Posted by Guest on Jun. 13, 2012 @ 10:17 am

If you want to see a FLOOD of

If you want to see a FLOOD of affordable housing in SF end jumbo mortgage subsidies.

Not only do renters get to constantly listen to millionaire landlords whine about how unfair the rules are, we get to pay them our tax money while they do it.

Posted by Guest on Jun. 13, 2012 @ 10:20 am

No, jumbo mortgages are market rate; it is conforming mortgages

that are "subsidized" (in a sense) because of quasi-governmental entities like GNMA and FNMA buying up loans and repackaging them as securities.

Posted by Guest on Jun. 13, 2012 @ 10:45 am

You're not from around here,

You're not from around here, are ya?

""For San Francisco, our "jumbo-conforming" loan limit was $729,750."

Posted by Guest on Jun. 13, 2012 @ 10:59 am

I am from around here which means that I know that $729,750 is

only about the price of an average home in SF, i.e. ten times the average family income.

So, 50% of new SF home loans are jumbo, i.e. not subsidized.

Posted by Guest on Jun. 13, 2012 @ 11:10 am

"Loan amounts between

"Loan amounts between $417,000 and $729,750 are often referred to as high balance or jumbo conforming loans."

http://www.trulia.com/blog/scott_sistilli/2011/12/ca_fha_conforming_jumb...

Posted by Guest on Jun. 14, 2012 @ 12:01 pm

Yes, because the limit varies by location.

Not surprisingly, SF is at the upper limit of that range, so a conforming loan can still buy the average SF hone. Just.

Posted by Guest on Jun. 14, 2012 @ 12:04 pm

Which is why we need more

Which is why we need more market rate condos?

Posted by Guest on Jun. 14, 2012 @ 12:46 pm

We need more supply of all types of housing.

The market rate is merely a commentary on the excess of demand over supply. It isn't right or wrong - it merely is.

Posted by Guest on Jun. 14, 2012 @ 1:00 pm

Who is this "WE" who says

Who is this "WE" who says "WE" need more of all kinds of housing?

Posted by marcos on Jun. 14, 2012 @ 1:57 pm

Because in reality, I have my

Because in reality, I have my condo, and really thats all that matters.

Posted by marcos on Jun. 14, 2012 @ 2:40 pm

Exactly, Marcos, you have your condo and so you have a vested

interest in maintaining a shortage of housing as it pushes up the value of your home. Welcome to the same club as other hypocrits like Hestor, Welch, Shaw, Redmond, Brugmann, Daly and so on who, haing gotten theirs, don't want their equity devalued.

And welcome to capitalism. I think you'll like it.

Posted by Guest on Jun. 14, 2012 @ 3:13 pm

Playing by the rules aint' good enough for TICsters!

We paid a premium for our condo, played by the rules and did not take short cut to ask for special treatment when the get rich quick scheme that we were not playing blew up in our faces and led to our financial ruin. And we played out financing as conservative as the tea party and are secure in our home.

Posted by Guest on Jun. 17, 2012 @ 2:31 pm

How would you be disadvataged if folks who didn't have your

privilege were allowed to have the same control over their own homes as you do? Why do you wish to frustrate and disfavor those whose budget is less expansive than yours?

You sound a lot like straight folks who don't want gays to marry.

Posted by Guest on Jun. 17, 2012 @ 5:21 pm

"...buying up loans and

"...buying up loans and repackaging them as securities."

And then selling those securities to whom? Banks thought their lawyers had pulled off the perfect crime until they got put trillions of their own garbage.

Posted by Guest on Jun. 13, 2012 @ 11:09 am

GNMA has been going for decades and wasn't affected or

implicated at all during the sub-prime problems. You should do more research before spouting mindless kneejerk comments.

Posted by Guest on Jun. 13, 2012 @ 11:21 am

"GNMA has been going for

"GNMA has been going for decades and wasn't affected or implicated at all during the sub-prime problems."

Ha ha ha is that what you conmen are telling the TIC buyers now???

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac

(Federal takeover of Fannie Mae and Freddie Mac)

Posted by Guest on Jun. 13, 2012 @ 11:36 am

Clearly you cannot distinguish GNMA and FNMA.

Thanks for making your ignorance obvious.

Posted by Guest on Jun. 13, 2012 @ 11:45 am

Ha ha ha not ignorant enough

Ha ha ha not ignorant enough to buy a TIC but then who is anymore right?

GNMA hasn't been taken over buy the federal government? Interesting sales pitch.

Posted by Guest on Jun. 13, 2012 @ 12:04 pm

GNMA was created by the government and so could not have

been "taken over" by thats ame government.

Clueless commentary.

Posted by Guest on Jun. 13, 2012 @ 12:15 pm

I'm just correcting you.

I'm just correcting you.

"No, jumbo mortgages are market rate; it is conforming mortgages
that are "subsidized" (in a sense) because of quasi-governmental entities like GNMA and FNMA buying up loans and repackaging them as securities."

-- Nothing "quasi-governmental" about GNMA.

Posted by Guest on Jun. 13, 2012 @ 12:45 pm

No, you're exhibiting your ignorance

GNMA is not a government department. It is an agency that the government supports.

Posted by Guest on Jun. 13, 2012 @ 1:01 pm

Possibly because GNMA is

Possibly because GNMA is ALREADY part of the Federal Government?

http://en.wikipedia.org/wiki/Government_National_Mortgage_Association

(The Government National Mortgage Association (GNMA), or Ginnie Mae, was established in the United States in 1968 to promote home ownership. As a wholly owned government corporation within the Department of Housing and Urban Development (HUD), Ginnie Mae’s mission is to expand affordable housing in the U.S.)

Posted by Guest on Jun. 13, 2012 @ 12:06 pm

"...that are "subsidized" (in

"...that are "subsidized" (in a sense) because of quasi-governmental entities like GNMA."

Nothing "quasi governmental" about GNMA, which is in fact an actual governmental agency.

I actually thought you were one of those TIC Lawyer shills for a second.

Posted by Guest on Jun. 13, 2012 @ 12:25 pm

As an agency, GNMA is not part of the government

but is government-sponsored.

Look up the difference.

FNMA was a corporation.

Posted by Guest on Jun. 13, 2012 @ 12:34 pm

GNMA is a corporation, dude,

GNMA is a corporation, dude, only with only one big share holder.

http://en.wikipedia.org/wiki/Government_National_Mortgage_Association

"Ginnie Mae is a wholly owned government corporation. Fannie Mae and Freddie Mac, on the other hand, are "government-sponsored enterprises" (GSEs), which are federally chartered corporations, but still privately owned by shareholders. In September 2008, the GSEs were placed under government conservatorship, effectively wiping out shareholders."

Posted by Guest on Jun. 13, 2012 @ 12:55 pm

Again, you confuse GNMA with FNMA

I give up. Believe whatever you want.

Posted by Guest on Jun. 13, 2012 @ 1:07 pm

NO way. I give up on you

NO way. I give up on you first. YOU believe whatever YOU want.

Posted by Guest on Jun. 13, 2012 @ 1:21 pm

I believe that government

I believe that government support of the mortgage market makes you a welfare queen.

Posted by Guest on Jun. 13, 2012 @ 1:27 pm

Taking advantage of government policies is smartness.

Just ask public sector unions of you dont believe me

Posted by Guest on Jun. 13, 2012 @ 1:34 pm

I'm just sick and tired of

I'm just sick and tired of real estate conmen driving America into the ground.

Posted by Guest on Jun. 13, 2012 @ 1:46 pm

Oh yeah?

I was evicted in an Ellis Act move-in and I have had friends who suffered the same experience. The reality is that finding a new place (with always higher rents for those of us who have lived in the same unit for several years) and moving pretty much sucks everything out of you. No one has time to monitor whether the new owners then waited a year or even less and flipped the place from owner-move-in to a TIC.

For that reason, I think one option is to provide free monitoring and legal services in all cases where tenants were moved due to Ellis Act, so that it is not dependent on the resources of the former tenant. The city would recover the costs when it acted against an owner who violated the terms.

In lieu of a one-time fee, I also think consideration should be given to sharing the increased value of the property at the time of sale. That’s what we do with property set aside as affordable. The owner gets a percentage of the increased value after sale, and a percentage goes back into affordable housing. Why not create a similar system when a former TIC is sold so that the computed increase in value of the property is shared by the owner and the city, so that funds go regularly into affordable housing?

I also would outright prohibit converting units to homeownership that are four or more bedrooms. One reason we lose families is that it is impossible to find secure housing once you need three or more bedrooms. Mostly those are in pre-1979 housing. This is one element of our housing stock that is not being replenished and we can not afford to lose. For the most part, this housing is also located in areas with the amenities people want -- nearby stores, public transit, schools and parks.

Posted by CitiReport on Jun. 12, 2012 @ 7:44 am

Paragraph 3 of your post:

Paragraph 3 of your post: you think that the City should get a cut of the property value gain upon sale? Give me a break. Would the City also pay the homeowner if the property went down in value? There are already capital gains taxes paid at the federal and state level upon sale. And the City has a real estate transfer tax, so if conversion to a condo makes the property go up in value, the City will collect more in taxes. What you're proposing sounds an awful lot like a taking and would get challenged in court.

Paragraph 4: you want to prohibit any conversions of properties with 4 or more bedrooms because families (renter families, presumably) like those units? Perhaps you should consider that families like to own their homes, too.

Posted by The Commish on Jun. 12, 2012 @ 9:04 am

You only get evicted because your rent is too cheap

If you paid the going rate, and obey other aspects of your lease, you'd never be evicted. Rent control actually encourages evictions, because it creates artificial, contrived situations where the interests of the landlord and the tenant are opposed instead of aligned.

Anyway, Ellis'ed buildings can't be condo'ed so your point is irrelevant here. Allowing more condo's will not effect Ellis evictions

Posted by Guest on Jun. 12, 2012 @ 10:10 am

Rent can't rise high enough

Rent can't rise high enough to make TIC -> condo conversion a poor investment given that it would take years to realize the increment of sales over rent collected on a monthly basis.

Posted by marcos on Jun. 12, 2012 @ 10:49 am

With annaul rent hikes limited to 60% of a super low CPI,

the reality is that SF's rental portfolio will continue to dwindle indefinitely, probably until such point as there will be a plurality to repeal rent control.

I've done the math twice now and the case for Ellis/TIC is compelling on almost any analysis. And often you don't even need to Ellis.

Buying rental property in SF has become deal-oriented rather than business-oriented - you buy a building with low-rent tenants and then out the undervaluation.

Rent Control is the classic example of the law of unintended consequences.

Posted by Guest on Jun. 12, 2012 @ 11:13 am

The market will not bear

The market will not bear rents that are high enough to compare unfavorably with TIC conversion and condo conversion even as the market bears very high rents.

Posted by marcos on Jun. 12, 2012 @ 1:33 pm

Markets decide what markets will bear, and not you.

That's gotta irk ya.

Posted by Guest on Jun. 12, 2012 @ 6:36 pm

Right, and the market will

Right, and the market will not bear rents at that level because the spread between wages and rental costs would be much higher than today in order for rental proceeds to compare favorably with conversion sales proceeds.

Posted by marcos on Jun. 13, 2012 @ 8:22 am

If you knew what markets would do, you'd be rich.

I happen to know that you're not.

Posted by Guest on Jun. 13, 2012 @ 8:48 am