By way of a plugged-in tipster and Supervisor Carmen Chu, San Francisco’s Budget and Finance Committee “voted 3-1 on Monday to table/not to advance the [one-time condo conversion lottery bypass for a fee] proposal forward. Unless the Budget and Finance Committee reverses its decision or a majority of the Board reverses the motion, the proposal will not move forward with the budget.”
Condo Lottery Bypass For A Fee Resurfaces In Mayor’s New Budget [SocketSite]
Details, Dollars, And Devil For SF Condo Conversion Lottery Bypass [SocketSite]

37 thoughts on “Budget and Finance Committee Kills Condo Lottery Bypass For A Fee”
  1. What a shock!
    And now the mayor can use his “attempt” to curry favor with the conservatives to help his campaign.
    “I tried”, he’ll tell them. “Just ignore that gay marriage thing. I’m really a conservative at heart.”
    Your tax dollars at work. Nothing happens, but the politicians play the system like a violin.

  2. Good — it was a bad proposal that would have further reduced the value of condos. TICs have lower prices due to the inherent difficulty with condo conversion. Letting a tidal wave of pent up demand convert for a fee would be a disaster.

  3. “Letting a tidal wave of pent up demand convert for a fee would be a disaster.”….. for you
    For society it might be pretty cool

  4. Simple pandering. Way more voters rent than are in the TIC conversion lottery. Fiscal sense in the midst of a budget crisis – who needs that?

  5. What a shame! Who is on this budget and finance commie-itee? Sounds like it can be reversed with spirited, targeted campaigning.

  6. The BF committee is composed of the following:
    John Avalos, Ross Mirkarimi, Sean Elsbernd,
    Sophie Maxwell, and David Campos.
    Lets find out how each one voted.

  7. The committee votes via simple majority, but the full board can also override via simple majority? The SF BFC, part of the department of redundancy department

  8. You guys are wasting your efforts. The mayor knew this was DOA when he put it up. The hundreds of thousands of tenant voters can and would run the board out on a rail vs a handful of TIC owners and some realtors? Don’t make me laugh. This has no chance in a political system. Never did. Never will.

  9. Newsome should have put this on the ballot for November, like he did with his sit/lie ordinance.
    If the fees were high enough, it wouldn’t necessarily cause a “flood” of conversions and could bring in some much needed cash.
    For all the talk about the strength of the tenant vote, the ballot measure earlier this month that would have protected some tenants from rent increases failed.
    There is nothing about temporarily allowing conversions of TIC to condos, with a hefty fee, that directly threatens any tenant rights.

  10. ^You’re completely out of touch with the voters, and your lies and misstatements won’t be believed for 30 seconds. It’s going nowhere.
    Newsom could have put it on the ballot if he wanted to, but he didn’t did he? He knew the voters would CRUSH it and blame him for putting it there. There have been other conversion measures that alsogot completely crushed.
    It’s one thing to force a landlord to, through no fault of their own, give up very small rent increases to which they are entitled (the issue of the last election), and another to hand a windfall to people who bought TICs as TICS and allow them to convert rent controlled TICs to non rent controlled condos. Renters have crushed every one of these attempts.
    Sorry, you’re wasting your time. Much needed cash can be gotten by overturning prop 13. The same sort of misleading tactics regarding prop 13 were what initiated rent control in the first place. You’d be playing with fire here: abolish rent control on TICs via an end run of condo conversions and the voters are just as likely to abolish prop 13. I doubt you want to open up the “Much Needed Cash” can of worms. You could get your head handed to you.

  11. Prop 13 is statewide, the condo conversion is local. The much needed cash would have been SF cash. I guess the fxxkxxs at City Hall will have to find $20 million to cut. Doubt they’ll even try.
    The more equitable way to raise much needed cash, maybe even create a surpluss, is to increase the cap that rent can be increased to 5%, the 2% is so 1970’s and that’s just inflation. The younger, more recent tenants are already at market rate so they would’nt be impacted much if at all. But the nimby renters would finally have to pay for all of the nice, sweet things they vote for themselves. Homeowners have their taxes increased every year, and we’re no different, we don’t get more raises than the average person, not all of us work for the City. Hell, some of us have even had to take paycuts. Mine was 20%, and with more hours.

  12. I’m a renter, I would vote for an initiative allowing the bypass, but I also know that there is no way in hell that it would actually win. The TIC market is tiny, and TIC owners and small apartment owners are really the only ones who would benefit. On the other hand renters, condo owners and SFH owners would lose out, as more condo supply would hurt all of those parties (fewer apartments available for rent, and more competition for sales).
    Far better to put an initiative to end rent control, which would benefit almost everybody (although most renters probably don’t realize they would actually benefit).

  13. “Homeowners have their taxes increased every year”
    yes, by a max of 2% as per Prop 13 AKA rent control for homeowners.
    I agree rent control is a bad thing but so is Prop 13.
    When home owners in SF give up their rent control I will give up mine.

  14. the financial aspects of this don’t matter much anyway, given the pristine balance sheets of SF and California.

  15. We really should just raise the annual fee for entering the lottery AND the fee for conversion if you win.
    $10K/year plus $50K for the winners would provide “badly needed cash”.

  16. As a TIC owner, I am disappointed, but was not counting on this to pass.
    So here is my gameplan now that I have to continue dealing with rent control:
    *Don’t rent my unit to old people. They won’t want to move after they turn 70, and if they live a long life, I could be stuck with fifteen years of rent control.
    *Don’t rent my unit to families. They may want to hang around until their kids graduate. I am now officially anti-family.
    *Don’t rent to people with disabilities… such a non-starter!!
    Going forward, I am going to only rent my unit to young women in their early 20’s who are likely to either move in with a boyfriend or go to graduate school in the next 2-3 year, thus taking care of that whole rent control problem.
    Sorry to the old folks, middle class families, and cripples… I will always find an excuse not to rent to you. And it’s all the fault of people like tipster who create these archaic and easily-bypassed laws that are terribly thought out.
    (Note that I am being sarcastic. Yup. This was all sarcasm. No truth to is.)

  17. Yes, a sure fire way to keep the prices of existing condo inventory from slipping too much…continue to restrict supply.

  18. Note: Yes, I’m aware of the technicality where rent control goes away after the next sell, etc, my Rules To Avoid Rent Control apply broadly speaking.

  19. glad some people are finally admitting to a desire to artificially restrict condo supply to keep prices high.

  20. Foreclosures, infill projects, One Hawthorne, strategic defaults skyrocketing: there’s enough condo supply for years. Renters are not worried about the supply of condos being too restricted any time soon. We’re drowning in condos!
    We’re not drowning in condo conversion fees and lottery entrance fees. That’s something the renters could really get behind: preserves rental supply AND provides more funds for city services! It’s really the perfect political solution to the budget crisis in a city in which the majority of voters are renters. If people will pay a bypass fee, they’ll pay the same fee when they won. Probably more!
    I can’t think of an easier slam dunk winning proposal in SF! Every condo owner would vote for it, and every renter would vote for it! And I can see how “concerned” the TIC owners are that the city get “badly needed cash” so I’m sure they would vote for it too! We really need to get this on the ballot!

  21. “Going forward, I am going to only rent my unit to young women in their early 20’s who”…
    …don’t have money to pay the rent most landlords want to charge?
    Not worried.

  22. How about an e-bay style auction where the 200 units bid for conversion each year? Highest bidders win. Revenue would go up and it gives bidders some way to chart their own destinies.

  23. Never had a chance, “DOA” as tipster said, and it won’t until there’s a fundamental shift in SF politics.

  24. empnor,
    An auction system would be either unbalanced or highly technical and open to loopholes. Some of parameters to take into account are Number of units and Location. A 6-Unit 8000sf in PH would have a huge advantage over a 3-Unit in the Excelsior. They’d have to give weights to key parameters, making the bidding very complex and ultimately murky.
    The whole concept of a TIC is deeply flawed in the first place. All the patches applied to it are a big mess.

  25. “The whole concept of a TIC is deeply flawed in the first place”
    uhh… you need to provide some sort of support or justification for a statement like that. TIC ownership is a well established form of property ownership, and while not right for everybody, has no inherent or fundamental flaws.

  26. The TIC principle is flawed because it is in contradiction to some basic principles of separation of liability. This is a capitalistic society where you are not supposed to suffer the consequences of someone else’s actions. With TICs, you’re in business with the other “owners” whether you like it or not.
    Condos are a much better way to manage financing, liabilities,…

  27. There are plenty of situations where liability is shared, even in business, such as general partnerships, so that is nothing unique to TIC ownership.
    If somebody goes into a TIC and doesn’t understand the liability issues, that is their own fault, not a flaw in TIC ownership.

  28. The issue is that this is a home, not a business. But the TIC makes it one. SF has enough rules over rules over even more rules, plus the future rules that the powers that be will create come next election. Adding an extra layer of uncertainty makes TICs very unattractive.

  29. Nobody is forced into a TIC, and sharing liability does not make it a business, it is still a home. As far as condos go, the recent shenanigans at the Infinity show there is just as much possibility of legal issues in a condo.
    I’ll go so far as to say there are some benefits of a TIC over a condo. It’s entirely clear that you are getting in bed with your neighbor in a TIC, while in a condo it can make people think they don’t have to worry about issues because they have a deed. Condo associations are quite frequently involved in lawsuits, which I put up as evidence in support of my theory.
    In fact the liability issues of TIC can make it easier to resolve issues, since anything you do to your co-owner can come back to haunt you, it’s best to make sure everybody is happy.
    Again, a TIC is not for everybody, but there’s no inherent flaws.

  30. The Infinity is another story. It’s a concrete “efficiency” box with huge overhead that was marketed as “luxury”. People are stacked by the 100s AND pay a little fortune for that privilege. No wonder there are conflicts.
    For TICs, the argument that it forces people to be nice to their neighbors works both ways. Having to be nice because conflicts can be messy means you lose some level of freedom. It works out OK until it doesn’t. However understanding people can be, we all have a breaking point to how much we can take.
    Also, in a condo, you can stop making the mortgage, pack your bags and leave. The effect on other owners is minimal. Only TICs with fractional financing can be shielded from that. And try to do a refi on a TIC if you’re in a bind. Your equity is locked until the day you sell. Not my definition of freedom.
    Last, if there are no flaws, why the huge lack of demand? TICs have been there for a long time, but that by itself doesn’t make it a reason to keep them around. A Realtor told me a few months ago that stopping all TICs and converting to condos would create a loophole in rent control. Each condo owner would be able to do his own owner move-in into their unit, instead of the current limitations of 1 OMI per building with TICs. Rental buildings would be sold individually and renters kicked out one by one. That’s why we still have this dinosaur status.

  31. “Only TICs with fractional financing can be shielded from that.”
    Not true, it’s pretty easy to use a contract to mitigate this sort of problem. Have reserves to be used in the case of non-payment, have a clause allowing forced sale if one partner stops paying. Sure, it’s not as simple, but it takes away the major issue.
    The amount of demand has nothing to do with the validity of a type of property. Commercial warehouses also have a small demand in SF, does that make them “deeply flawed in the first place”?
    Some people think condos are a stupid form of ownership, other people think home ownership at all is a bad idea. You are welcome to not want to own a TIC, but to say that there is an inherent flaw is just not correct.

  32. Wow, pretty conservative SF crowd here.
    (Not that the issue of favoring TIC vs. Condos has any sort of political point of view, but judging by the comments here and on other recent posts.)

  33. The fact is that people should be allowed to turn their TICs into condos or any rental property into condos. Why are renters so special that the City should favor them? What proof is that they add value to the City as opposed to owners? And, if these people are so special, why aren’t we worried when many of them leave the City in order to be able to afford a place to purchase?
    The City has a policy of making keeping rents cheap for those who have been around for a long time, rents more expensive for those who are just moving in (or need to move), and ownership more expensive than it would otherwise be. There is absolutely no logic to this policy, but parasitic, selfish renters are politically powerful enough to keep it in place (all while claiming that landlords are “greedy” — LOL — the truly greedy person is the renter who is not willing to pay the true price for their housing.)

  34. Whether renters are adding value or not is not the point. If Sf was 99% 3-legged albinos there would be laws pandering to 3-legged albinos. 4-legged albino not welcome: tough luck, move to Vallejo.
    SF got trapped into being a city of renters. The rest of the country and state is 70% owners. SF is at odds with the rest of the state which explains the incredibly (some call it counter-productive) creative laws.
    You do an Ellis eviction (if you are ever by any chance allowed by the local busybodies and supes to ultimately exercise your right), you cannot rerent or condo convert before a number of years, and numerous other rules that pop up every 6 months or so. This makes it a very bad business environment for RE investors as well as prospective landlords.

  35. This actually was a good idea… Newsom was targeting TIC’s (not rentals) and an increased fee would have benefited the city, let TIC owners escape the crazy finance trap that they are in, and would have streamlined, 1 time, a very broken conversion system.
    All this baloney about losing rentals is just that- they already don’t exist- they’re owner-occp’d TIC’s. Plus, if a protected tenant is evicted, the bldg is no longer eligible for conversion, so who now exactly is being protected?
    I’d be more sympathetic is there was a “means-testing” for rent control but there isn’t & that means ‘mom & pop’ landlords are subsidizing other, sometimes better-off financially tenants.
    It ain’t right. Make the fee higher if you want, but let these people convert their units.

  36. Why is the assumption that TIC owners wanting to condo convert are looking always at fetching a larger sales price? They end up bearing the larger interest rate payments, typically at Interest Only loans for a fixed period and becoming adjustable after this period. Condo conversion makes sense for TIC owners to separate out their mortgages to take advantage of the historically low rates. The government has enabled this to happen but TIC owners suffer as a result of being incapable of qualifying for these low rates because the mortgages are different vehicles. It’s a shame that condo conversion is viewed as a ploy for TIC owners to convert into condos, and hence garner a potentially larger selling price when the entire housing market is collapsed right now. Do you all truly think condo conversion will magically add $100K to the value of the TICs when they were bought in the last 4-5 years? They mostly happen to be underwater (you can do the research) hence TIC owners end up being in the same boat as most homeowners in SF.

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