San Francisco has a lottery system that selects 200 units annually for conversion into condominiums. With 1,799 units having lost the lottery this year and a multimillion-dollar deficit to close, Mayor Gavin Newsom proposed legislation that would allow these units to bypass the lottery system by paying a $20,000 fee per unit. The cost would’ve been reduced depending on the number of years one had participated in the lottery.

But, the proposal was slammed by Budget and Finance Committee Chairman Supervisor John Avalos, who said it threatens San Francisco’s rental stock and encourages evictions. The condo conversion is “a program to disincentivize the turning over of rental property,” Avalos said.

So with the city in a desperate situation and San Francisco with one of the lowest Home-Ownership rates in the state the call is we’ll lose precious rental stock.  Um … Ok!

Good News Regarding TIC Lottery Bypass [SFHomeBlog]

Supervisors Kill Condo Proposal [SF Examiner]

Quick Facts San Francisco [US Census Bureau]

Plan C has the details and included the information in their email action alert yesterday:

The details of the proposal are as follows: TICs must have participated in the 2010 condo conversion lottery in order to be eligible for the condo bypass. The fee for the bypass starts at $20,000 per unit for those who first participated in the lottery in 2010, and declines by 20% for each previous year of unsuccessful lottery participation. So, if 2010 was the first year your TIC participated in the lottery, your fee will be $20,000 per unit in the building. If 2010 was your second year, your fee will be $16,000 per unit. If 2010 was your third year of participation your fee with be $12,000 per unit. If 2010 was your fourth year $8,000/unit, and if it was your fifth year and beyond, $4,000/unit. Note: If your TIC only qualified to participate in the last 25 units which were drawn from Pool B of the 2010 lottery (because of eviction history), you are not eligible for the one-time bypass.

Plan C has been active in promoting this issue and has worked to create a solution that helps tenants as well.

The proposal will bring significant revenue (likely in excess of $8M) to the city during this time of budget crisis – money that will provide funding to affordable and supportive housing programs that might otherwise be cut. At the same time the legislation will bring much needed ownership and mortgage relief to middle income San Franciscans that owner occupy their TICs. This is sensible legislation that helps everyone — it addresses the needs of TIC owners AND provides funding to low-income residents with special housing needs. Tenants are also protected — to be eligible to participate in the lottery, the TIC building must not have been subject to recent Ellis Act evictions, must not have evicted any protected tenants and must not have more than one no fault eviction.

So, what to do to help this proposal be included in the final budget?  Well, I’m going to second the call to action that Plan C proposes:

How you can help?

Email the Mayor and Key Supervisors
The Mayor and the Supervisors need to hear from us — contact them today by clicking on the “Contact City Hall” link to the right — let them know that you support the one-time condo bypass. Tell them that the program would help thousands of first-time homeowners, would hurt no one, and that it would help solve the City’s budget mess. And then tell them that you support overall reform of the completely broken condo conversion process! If you have the time and desire to call them, do that too. You can use this website to do it.

Attend the budget hearing on June 21
The condo bypass will be considered at the budget hearing at City Hall on June 21. The hearing starts at 10AM, and the Condo Bypass is Item Number 4. We don’t expect the Board to get to Item 4 until at least noon. Please come and speak in public comment – tell the supervisors that you support the condo bypass! We know that the opponents of this program will be out in force – so it is critical to have supporters there as well. If you are able to attend the hearing, let us know by email at info@plancsf.org – we may be able to give you better information as to exactly when to show up as it gets closer to June 21.

What else can you do?  Join Plan C,  at least sign up for their email updates, talk to other interested owners and get people to email and call our representatives.  This is a real opportunity to try and get this done!  For all you owners with group loans, wouldn’t you love to be able to have your own loan as rates are so low currently?  It’s time to embrace this and allow more owners to condo convert!

As it stands, there is one stunning tax bill sent out to all Tenancies in Common, regardless of how many individual units exist within the TIC, or how long the TIC has been in existence. That tax bill, in it’s simplest form, is split by the individual owners based on their percentage of ownership of the Tenancy in Common. The trick begins once an owner sells, or remodels – thereby triggering a reassessment (aka increase) in property taxes – the increased portion of the tax bill then becomes the responsibility of the offending owner whether they are the new kid on the block or someone looking to update.

Now, take a six unit TIC that’s been around for oh, I dunno, say 10 years, which has seen several resales, a few remodels, and voila! – Dante’s Hell of accounting.

To stave off any confusion, Ting plans to send out notices in July to all known Tenancies in Common, along with the yearly notice of assessed value, clarifying the city’s policy on separate assessments for TICs and how to request one. It’s important to note that simply getting a separate tax bill does not exclude every owner of the TIC partnership from being liable for both their share as well as the whole, in the event one owner falls behind. Thus reiterating the importance of a great TIC agreement and reserve account.

S.F. may clarify TIC units’ tax liabilities [SFGate]
Calling ALL Tenancy in Common Owners [SFHomeBlog]
Mapping San Francisco’s TICs [SFHomeBlog]