TIC eviction legislation moves on to full board

The Land Use and Economic Development Committee (made up of Supervisors Maxwell, McGoldrick, and Sandoval) voted unanimously yesterday to send the latest TIC legislation to the full board.

From today’s SFGate,

Legislation meant to slow the pace of evictions by landlords looking to cash in on the lucrative real estate market cleared a hurdle Wednesday — and Mayor Gavin Newsom’s office signaled he might not stand in the way of it becoming law.

The proposed ordinance, sponsored by Supervisor Aaron Peskin, passed a Board of Supervisors committee and moves on to the full board, where the first of two votes for passage has yet to be scheduled

The legislation would ban condominium conversions in buildings where evictions have occurred. It comes on the heels of two tenant-friendly ordinances that Newsom vetoed earlier this year.

The mayor’s office would not say whether Newsom — whose allies in the business and real estate communities are staunchly opposed to the legislation — would sign the ordinance if it reaches his desk. But Matt Franklin, director of the mayor’s office of housing, hinted Newsom is open to working with Peskin.

“The mayor is very concerned about the rise in evictions,” Franklin said. “He supports the intent of the legislation, but he wants to be sure it is implemented in a fair and equitable way. It will still require some additional tweaks.”

If approved by the full board, the ordinance would apply to buildings where multiple tenants were evicted or where individual senior citizens, disabled or catastrophically ill people were kicked out. It is meant to curb an increasing number of evictions in which landlords clear their buildings of tenants in order to sell to tenancy-in-common buyers who get together to acquire property, sharing a mortgage and agreeing to inhabit different units.Frequently, the goal of tenancy-in-common, or TIC, owners is to convert their apartments to individually-owned condominiums. Currently, city law limits the number of condo conversions to 200 a year; in 2005, 1,500 people applied. The right to covert to a condominium is approved by the city via a lottery system.

Peskin’s legislation would mean that TIC buyers of buildings emptied of tenants through evictions would never qualify for a condo conversion thus, backers of the measure say, eliminating part of the economic incentives driving the transactions.

It also would be retroactive, covering buildings where tenants were ousted since 1999.

How can they possibly punish the families and homeowners who bought units as many as seven years ago? They didn’t (in most cases) Ellis Act their buildings. They didn’t provide the eviction notices. They just wanted a home. And for this they are more or less criminalized?

If you think housing is expensive now, wait to see what happens if you (the citizens of San Francisco) let this one pass. Take away the hundreds of TIC units that are currently on the market (because they will plummet in value), and you’ll have a whole new disaster of a problem.

This is just plain awful.

Call your supervisor. NOW. Don’t think this doesn’t affect you, because it will affect EVERYONE in San Francisco, while only helping a few (albeit important) tenants.

Board Committee Votes 3-0 to Protect Tenants [BeyondChron]
Major Eviction Defense Legislation Hits Board Tomorrow [SFHomeBlog]

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10 Responses to “TIC eviction legislation moves on to full board”

  1. The Supervisors are happy to create hurdles for homeowners by falsely comforting tenants, but not provide a “real” solution to the housing problem which could be a better rent-control system and allowing, not stopping, condo projects.

    Ra at April 27th, 2006 at 6:45 pm ( )
  2. I don’t see how this could pass legal muster. This is the taking away of property rights, even if via lottery, without compensation. So this passes, development in SOMA is halted/delayed…do the supervisors understand basic economics…less supply will do WHAT to housing costs????

    CameronRex at April 27th, 2006 at 10:27 pm ( )
  3. Two great comments above… And that’s exactly it! It won’t pass legal muster, but then again NOTHING that those guys (Daly, McGoldrick, Peskin, Gonzalez) have every passed with regards to tenant’s rights has ever made it through the courts…

    The goal here is to not screw the housing market even further by letting this one get passed by the board. Mayor Newsom does not need to look like the bad guy here by vetoing crappy legislation. We need to communicate this to our supervisors immediately.

    There are enough TIC owners and would-be homeowners out there to make a difference. The problem is we aren’t used to mobilizing the way the tenants do. Tell all of your friends to take five minutes to send an email or make a phone call. It will make a difference.

    Matt Lanning at April 27th, 2006 at 10:39 pm ( )
  4. Matt, Please explain this apparent contradiction. You say, “If you think housing is expensive now, wait to see what happens if this one passes.” Then you say, “…TIC units that are currently on the market will plummet in value.”

    Both can’t happen right?,

    Kurt Kornbluth at April 29th, 2006 at 12:56 am ( )
  5. Actually, yes… TICs where there has been an Ellis Act or senior/disabled eviction will never be condo-convertible, so they will lose considerable value immediately. Everything else (which will then be a much more limited supply) will end up going up in price (basic supply & demand).

    Combine that with the pseudo housing moratorium in the Mission/Central Waterfront and we’ll have a whole new housing crisis on our hands…

    Matt Lanning at April 29th, 2006 at 1:07 am ( )
  6. Matt,
    I must be missing it. This is what you said:
    1. “TICs will lose considerable value.” Therefore, they sell for less.
    2.”Everything else go up in price.”

    If prices of TICs goes down, how can other housing go up? This is the opposite of what economics would predict.

    KK at April 29th, 2006 at 9:50 am ( )
  7. Actually, that’s not what I said. What I DID say is that TICs that have had multiple evictions or an eviction of a senior or disabled person will lose some of their value. Those units will be very difficult to sell for people who paid market value for them initially. Future units may or may not be sold with newer evictions of those above-mentioned types, but if they do, they will always be TICs, and therefore less valuable than a condo or a single family home.

    Right now, all buildings with six or less units are hypothetically condo convertible. With this new law, perhaps as many as 1000 units (complete guesstimate) will no longer be eligible for conversion.

    With 1000 LESS UNITS available for sale (because the buyers who really want to live in the city also want to be able to sell their units some day, and this will more or less preclude an easy resale), the supply/demand balance will shift and the prices of the now-fewer units available that are already condos or single family homes will go up.

    This is also the case because our Supervisors keep limiting the construction of new housing, which also affects supply.

    So what’s not to understand here? Less supply plus a consistent if not ever-growing demand equals higher prices for the properties that are not covered under this legislation.

    So how could economists predict that prices of what will be a lower supply of saleable properties could possibly go down? That’s just counter-intuitive.

    As an example, using cars and gas mileage for my argument, let’s say that there is a fixed number of 100 automobiles owned in San Francisco. Then let’s say that the supervisors pass a law that only cars that get at least 30 miles per gallon are allowed to be driven within the city limits. Now of those 100 cars, 20 of them are big SUVs that get 15 miles per gallon. No additional automobiles are allowed in San Francisco (100 is the limit) and 20 of them can’t be driven in the city limits.

    There is still demand for 100 cars, but now only 80 of them can be driven. Let’s also assume that you can’t (as with a house) pick up that car and sell it outside of San Francisco. Now those 20 automobiles have a far lower value, while the remaining supply of 80 cars is going have more value to those that are willing/able to pay for the privilege, and those resale prices will go up.

    The only thing that can change that equation is to allow more supply into San Francisco, and with idiotic supervisorial decisions not likely to go away any time soon, we’re looking at a continued flow of moratoriums and bad legislation.

    Does that make sense?

    Matt Lanning at April 29th, 2006 at 2:24 pm ( )
  8. Matt,
    I think I see your argument.
    1. “TICs will lose considerable value.”
    2. For people who paid market value for them initially, they will be off the market.(You hadn’t said that b4)
    3.”Everything else go up in price.”

    First, you’re doing a short-run analysis because the TICs will eventually come online thereby reducing prices overall.

    Also, you have a lot of assumptions built into your analysis:
    1. the value of the TICs will go below the initial price.
    2. people don’t sell houses below what they paid.
    3. The number of TICs can actually impact the market.

    At the end of the day, the argument is not at all definitive. That is, it’s very speculative and shouldn’t be stated as a fact. (I’m sure you agree)

    Finally, I’m beginning to see your argument as part of a broader opinion regarding housing. You want the supply of housing to increase.

    Let me just say one thing about that: micro-econ theories do not naturally apply to the housing market. This is why the places with the highest housing density are also the most costly (NY, SF, Hong Kong, etc.) PS I’ve taken a lot of grad level econ courses and can talk more about this if you’d like. Basically the time to add supply and the cost create too much friction for the implications of robust free market to apply.

    Rather than use a micro-econ argument for increasing housing, I suggest using something else. I’m assuming you just don’t want to sell more houses.

    kk at April 29th, 2006 at 9:03 pm ( )
  9. Thanks again for your thoughts. And yes, your assumption is correct. I love my job because I want to help people become homeowners and I want to find ways for people to stay in San Francisco that otherwise might not. So the impact on TICs is very negative. And despite the fact that their stated intentions with this legislation is to help tenants, it will end up hurting more in the long run, I think.

    Matt Lanning at April 29th, 2006 at 9:58 pm ( )
  10. Matt,
    Are you for helping people who live in SF to stay or creating unaffordable housing for the wealthy who want to live in SF?

    If it’s your goal to find ways for people to stay in SF, why not support the construction of apartments rather than condos? Do you support rent control?
    Thanks. Kurt

    kk at April 29th, 2006 at 11:00 pm ( )

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