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TIC Reform: Two-sided coin

Supervisor Wiener claims new law aids

tenants, others claim he adds fuel to fire

By Heidi Smith

Next month the San Francisco Board of Supervisors will vote on a piece of legislation introduced by Mark Farrell and Scott Wiener that would provide a one-time opportunity for certain owners of tenancies in common (TIC) buildings to convert to condominiums, provided that they pay a specified city fee.

This legislation was brought before the Board of Supervisors Land Use Committee on Jan. 28 but a vote was ultimately delayed. Board President David Chui set the next hearing on the matter for Feb. 25 in order to provide time for tenants and homeowner organizations to meet.

While the politicians make the proposed legislation out to be a win-win situation for all parties involved, concerned tenants and housing advocates are strongly against the measure. One District 8 resident stated that the proposed reform in which Supervisor Wiener refers to as “TIC relief” may indeed be more suitably called a “benefit to TIC owners.”

Why would TIC owners benefit from the condo bypass legislation?

Most owners of TICs bought their units before the downturn of 2008, at a time when bank loans were relatively easy to obtain. Since then, home values for many TICs have dropped, and of bank loans are less available. For these homeowners, condo conversion would create opportunities for much lower interest rates, less access to bank loans, and reduce the risk of foreclosure.

Under the proposed legislation, TIC owners who are eligible for the lottery can pay a $20,000 fee per unit and convert to condos. To be eligible for the lottery, a building must be mostly owner-occupied and cannot have had any evictions under the Ellis Act, a law that gives landlords the right to evict tenants to “go out of business.” These accumulated fees estimated to be in the millions, will be used as a dedicated revenue source for affordable housing development.

According to Wiener, the legislation has unprecedented protections for tenants who reside in buildings that convert to condos. It is estimated that only 15 percent of these TIC units are tenant-occupied. Under the legislation, tenants who live in these units would be given lifetime leases as a form of protection. This means that they cannot be evicted, nor can they have their rent raised more than rent control allows.

By providing lifetime leases to all impacted tenants and not just senior and disabled tenants, Supervisor Farrell and my legislation establishes an unprecedented level of protection for tenants who live in units that convert to condos,” Wiener emphasized. He claims that this protection is much stronger than for tenants in buildings that win the current condo lottery, who, if they aren’t senior or disabled, receive only a one-year lease.

Neighborhood housing advocate Tommi Avicolli Mecca begs to differ. Mecca has a long history as an activist defending tenants’ rights in San Francisco. He says that the protections Wiener brags about for tenants don’t work and are not enough.

Mecca points out that lifetime leases created for tenants of TICs don’t have the power to stop landlords from intimidating these tenants with harassment to scare them out. He doesn’t see any benefits to the proposed TIC reform. He strongly believes that TICs were created by evicting renters in order to create homeownership for middle income buyers. Mecca stresses that the folks being displaced represent the diversity of the city: long-term, generally low-income seniors, disabled people, people with HIV/AIDS, families, and immigrants.

If the legislation introduced by Supervisors Scott Wiener and Mark Farrell passes the Board of Supervisors next month, up to 2,000 tenancies in common will be allowed to bypass the lottery process and convert to condominiums,” Mecca explained.

Add those to the nearly 6,000 conversions that have occurred from 2001-2011 (according to stats from the Department of Public Works), and you have a sizable chunk of rent-controlled units that will have been yanked from our housing stock in the past decade or so in a city that can’t afford to lose rental units, especially those that preserve affordability while tenants live in them. TICs are still under rent control; condos lose it when they’re sold.”

Condo-conversion negates rent control. San Francisco currently has the highest rents in the country, averaging $3000 per month. The influx of tech companies and people with higher incomes moving to the city are creating a similar situation to the dot-com boom in the 90s. This has created a market of more potential buyers that may purchase rent-controlled buildings.

The families that bought your rent-controlled building are predatory economic exploiters,” blurted an aggravated anonymous tenant on the SFBG website who refers to the legislation as the economic cleansing of SF. “They all had the chance to purchase a non-rent-controlled housing unit, but figured they could make even more money destroying San Francisco affordable housing at the same time.”

Supervisor’s Wiener argues that TIC owners are not the enemies of renters. TIC owners are ordinary people, teacher, nurses, Muni drivers, carpenters and firefighters — not evil property developers. Many of these condo owners continue to rent their properties after conversion.

Cole Ryan is a TIC apartment owner in the Lower Haight.

I pay the bank 6 percent interest on my mortgage. My neighbor, who has condo status, pays 3 percent. I have been in the condo lottery twice and will have to wait another 10-15 years if the rules stay the same, a nice premium interest rate for the banks for a long time,” he commented on the SFBG site.

The proposed TIC reform legislation is not just black or white. Both Wiener and Mecca make valid points to their respective sides of the story. TIC owners are not trying to take away affordable housing from lower-income people. They are trying to make their own way in our expensive city, just as tenants are trying to make rent.

Like District 8 resident Peter Cohen said, “It’s more complicated, and very divisive, than appears on surface.”