Upheld by San Francisco’s Board of Supervisors in another 8-3 vote, unless Mayor Ed Lee vetoes San Francisco’s new Condominium Lottery Bypass within the next eight days, the legislation will become law and new rules for condo converting in San Francisco will take effect by the end of July.
The final language and summary for the amended legislation, including additional detail on the so-called “poison pill” should any lawsuits challenging the legislation be filed:
This Ordinance would suspend the condominium conversion lottery until at least 2024.
Between the effective date of the legislation and April 15, 2020, referred to as the Expedited Conversion program, specified 2-6 unit buildings could convert to condominiums once the applicants meet certain identified requirements for ownership and owner-occupation terms and pay a $20,000 per unit condominium conversion fee. The fee would be reduced 20% for every year before 2013 that the building participated in the lottery. The fee revenue collected would be placed into two different Mayor’s Office Housing funds with 75% earmarked for the Housing Trust Fund and 25% dedicated to small site acquisition to purchase market rate housing and convert it to affordable housing.
The Ordinance also would require that: (1) all non-purchasing tenants at the time of final or parcel map approval of the condominium subdivision be presented with a written offer for a lifetime lease with certain specified terms, (2) there be a binding and recorded agreement between the owner(s) and the City concerning the lease and (3) there be a binding and recorded lifetime lease between the owner(s) and the tenant(s) if the tenant(s) accept the written offer. The legislation would adopt special provisions that apply if there is a contract or option to sell a unit or interest in a building potentially subject to a lifetime lease. In recognition of the lifetime lease requirements, buildings would receive a refund on the condominium conversion impact fee tied to the number of units associated with a lifetime lease. The Ordinance would establish time periods and procedures to pay the fee or to defer fee payment and complete steps in the conversion process. The legislation provides for a public notice and comment period and potential public hearings in advance of any tentative approval action of the map by the Department of Public Works.
The legislation would provide that after suspension of the condominium conversion lottery, which can be no earlier than 2024, the lottery would resume either when the maximum suspension period is reached based on a formula related to conversions pursuant to the expedited conversion process or earlier if the City meets specified thresholds for production of new affordable units. When the lottery resumes, the Ordinance would limit the maximum building size for conversion to a 4-unit building, although an exception is provided for certain 5 or 6-unit buildings that meet specified qualifications. While the owner-occupancy requirement would stay the same as current law (3 years), the legislation also would require that any 3-unit building have at least 2 owner-occupants and any 4-unit building have at least 3 owner occupants. In addition, the legislation would prohibit buildings from participating in the lottery if there were certain evictions within a 7-year period before the lottery.
The Ordinance contains a provision that if any lawsuit is filed against two specific sections of the legislation, the expedited conversion program would be suspended at the time the lawsuit is served on the City and until a final judgment is issued in favor of the City. During this time, applicants could seek a refund of the conversion fee and any unexpended permit fees. When the lawsuit is served on the City, the City would not accept any new conversion applications.
Depending on which of the two identified sections of the new law is challenged, the impact to pending applicants would be different. If the challenged provision is the new proposed Section 1396.5 (suspension of the condominium lottery), then any pending applicant who obtains a final and effective tentative parcel map or tentative map on or before 6 months from the service of the lawsuit can proceed to final parcel map or subdivision map approval for the conversion under the Expedited Conversion program. If the challenged provision is the new proposed Section 1396.4(g) (property owner obligations related to the lifetime lease) or both Sections 1396.4(g) and 1396.5, then: (1) any pending applicant who did not obtain a final and effective tentative parcel map or tentative map on the date of service of the lawsuit would be prohibited from converting through the Expedited Conversion program and (2) any pending applicant who obtained a final and effective tentative parcel map or tentative map prior to the date of service of the lawsuit could proceed to final parcel map or subdivision map approval for the conversion. In addition, if only Section 1396.4(g) is challenged, then a building that does not have any non-owning tenants can apply for conversion and obtain a final parcel or subdivision map at any time as long as it meets the requirements of the Expedited Conversion Program.
The Ordinance specifies that if a court upholds a challenge to Section 1396.4(g), Section 1396.5, or both, then the Expedited Conversion program will resume. If a court finds that Section 1396.4(g), Section 1396.5, or both is/are invalid, then: (1) the Expedited Conversion program will terminate for those buildings not otherwise authorized to convert, (2) the condominium conversion lottery will resume in January 2024, and (3) the Board would hold a public hearing(s) to consider revisions to the condominium conversion process that are consistent with the court’s findings, among other issues. The Ordinance also would adopt environmental findings.
The full text of the amended and approved legislation: Condominium Conversion Fee Ordinance.
∙ Potentially Problematic Condo Conversion Legislation Approved [SocketSite]
This isn’t complicated enough.
The last paragraph in the editor’s post says
If a court finds that Section 1396.4(g), Section 1396.5, or both is/are invalid, then: (1) the Expedited Conversion program will terminate for those buildings not otherwise authorized to convert, (2) the condominium conversion lottery will resume in January 2024
In short, the law was flawed, but the lottery process is still postponed until 2024.
This right there is an invitation for renter advocates to go crazy and write a very poor law. They probably thought “we come up with crazy sh!t and then put a clause that says if someone proves this is actual crazy sh!t then they get screwed”.
Pardon the language, but there’s no polite way to express it.
Under the previous condo conversion rules, a two-unit owner occupied TIC building qualified for a fast-track condo process.
With the latest TIC proposal approved by the Board of Supervisors, will these two unit buildings retain the current status?
I’ve read and heard ambiguous statements regarding such.
Thanks.
I think the mayor should veto it and then fight to sustain his veto. It needs to be rewritten or dropped completely.
I think that Mayor Lee (a lawyer) should understand the legal implications of this flawed legislation enough to veto it. Once it is vetoed, everything should go back to status quo of a lottery of 200 units per year which proves to be a better method than this legislative experiment.
I think it was approved by a veto-proof majority of the Board of Supervisors. If that’s the case, even if he vetoes it, presumably the supervisors would vote the same way as they did before and override the veto.
I wonder how that would work re: the updated poison pill clause. It now basically states “If a lawsuit challenging the suspension of the lottery is upheld then the lottery will be suspended”… huh, I can’t imagine that’s how it would actually work out in court.
My current guess is that this becomes law, is challenged in court, but that the challenges are ultimately unsuccessful. The biggest wild card being how long said lawsuits hold up the process and whether or not some conversions make it through beforehand.
The poison pill will be the first thing the courts rule against. A law that penalizes folks for just questioning the law in court won’t hold up. No way. Not to mention the absurdity @TJ points out.
I think the $64 question (assuming Mayor Lee doesn’t have the stomach to take on the tenants either) is what happens when the poison pill is challenged?
Yes, 8-3 is a veto-proof majority, however I am pretty sure that some of the moderates on this issue (Breed and Cohen in particular) would not vote to override a veto. It is good to have a favor in the bank with the mayor, and those two supervisors were on the fence on this issue anyway. Since they were going to lose, they chose not to go against the Tenants Union — not worth it if you’re going to lose the vote anyway. Obviously the socialists would not change their vote (Mar, Kim, Chiu, Avalos, Campos).
Editor — With regards to the poison pill (last paragraph) — let me get this straight: If no lawsuit is filed, the lottery is suspended until 2024. If a lawsuit is filed and loses, the lottery is suspended until 2024. If a lawsuit is filed and WINS, the lottery is suspended until 2024, even if a court says that it isn’t legal to do that, AND there would be no condo conversion bypass program? How in the world is that possible?
UPDATE: Condo Conversion Program Kicks-Off With A Challenge In The Works.