Details for Mayor Newsom’s proposed one-time condo conversion lottery bypass for a fee for owners of tenancies in common (TIC’s) by way of Plan C San Francisco:
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 [would] be $20,000 per unit in the building.
If 2010 was your second year [of lottery participation] your fee [would] be $16,000 per unit. If 2010 was your third year of participation your fee [would] be $12,000 per unit. If 2010 was your fourth year [it would be] $8,000/unit, and if it was your fifth year [or] beyond, $4,000/unit.
Also noted, “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 [would not be] eligible for the one-time bypass.”
∙ Condo Lottery Bypass For A Fee Resurfaces In Mayor’s New Budget [SocketSite]
This seems like a no-brainer if your TIC is in a decent neighborhood and all the owners can swing the cash. Wouldn’t converting easily add more value than this cost?
This is silly to get excited about this as we all know the board of Stupes wont let this pass
If the Supervisors reject this excellent budget item, then the voters will have their chance in November to approve it.
As we just saw, the voters are not brainless zombies who approve every anti-homeowner law that comes their way.
The prospect of raising $8mil for the city is great.
No person who is educated on the matter would oppose this one-time conversion… though let’s keep our fingers crossed that voters do the research.
I think Mikey is right that the Board is unlikely to pass this – but the Mayor can put this on the ballot with a stroke of the pen (the deadline is this Tuesday, June 15). And if he does so, he can withdraw it later (so he could use the ballot box angle as leverage to force a negotiated settlement wtih the Board). So the real thing to watch is whether the Mayor will act by Tuesday.
i think more people would be willing to pass this if the fee were higher. With a $50K fee and 10% less per year, i would be willing to bet you would still have a lot of takers who want to avoid the lottery.
As an example, i think the anti-eviction crowd and the pro-revenue crowd, and I, would prefer 20 units in San francisco pay $50K to circumvent lottery for $1M revenue than have 50 units pay $20K for $1M.
$20K fee is nominal and almost every TIC owner would pay to convert by year 3. (12K/unit). the anti-eviction crowd is not going to let that happen.
this new action makes sense only if the fee is higher. IMHO
The city should allow any TIC to convert to a condo and shouldn’t be charging these ridiculous fees to do so. In fact, they should allow any apartment complex to convert to condos if that’s what the owner wants to do. There’s absolutely no rational reason for the city to take away the rights of property owners in the way that they do.
The city isn’t taking away any property rights when it expects people to stick with the type of property they purchased.
The deeds to those properties are managed by government. They needn’t be, if individuals are willing to take all the risks involved in not having government recognize their hand-drawn property lines.
But property owners only want to be rugged individualists after government has handed them all the necessary tools, including the official sanction on property lines.
They accept the protections government provides them, then they wail when government imposes restrictions on them. They’re like little brats who take all their parents’ work on their behalf for granted and then whine because they can’t do anything they want.
Gimme condo conversion, so I can juice my property value at the expense of future buyers. Gimme a cheap mortgage, and then let me have a modification when the deal doesn’t work perfectly for me.
Gimme tax breaks coming, going and staying. Gimme a BMR place, because I’m so special, but let me sell at market rate because I should be treated just like everybody else. Gimme foreclosure moratoriums, but don’t spare evictions of tenants.
You wsnt your property rights? Great. You bought a TIC. You have a TIC. Switching it to condo is government interference.
The real problem with this legislation is that it reduces affordability for future buyers — and at way too much of a bargain for the speculators who bought TICs.
Considering these future sellers will get at least $250,000 tax free and that they paid TIC-based low property taxes the whole time they owned, this is absurd.
Great for TIC owners. I know a few who have been waiting on the lottery for 5-6 years. I can’t help but think that there’s something else looming here. Like a potential dark cloud on the horizon with respect to TIC’s.
@Molly
I disagree with many people who post on SS, but often times I am impressed with their responses — regardless of how much I see things differently.
This is not the case with you.
You are insane, and should not be speaking amongst the rest of us. You have the legal right to do so, and the moderators can leave your posts up there. But make no mistake… you are freaking insane.
Has Newsom publically suggested he might put this on the ballot, or are we just speculating? I can’t see any way this gets through without a shot at the ballot box, and even then it’s no shoo-in.
Is this fee in addition to what they already charge? I wish I could remember how much the city portion of the 20 something grand I paid a couple of years ago? Between the surveyors, city fees (planning dept. and repairs), title and lawyers, well it turns into a cash blur.
looking forward to what the mayor does tomorrow and atttending the city meeting next week. from what i’ve read so far there are still some unanswered questions. Hopefully Andy Sirkin shows up.
– will it apply to multi unit buildings that are not officially TICs but have attempted the lottery (i.e. one owner owns the whole building?
– what if one owner of a TIC opposes conversion but everyone else in the bldg wants to. how does the TIC agreement handle that?
– if it passes and a lot of owners go with it, will the city change the rules of next year’s lottery right afterwards? (i.e. will the city screw those who don’t play this game that are hoping for less competition in next year’s lottery)?
If anyone has the list of participants in last year’s lottery it would be helpful to do our own analysis of how many might convert. I’m thinking the buildings that are have the higher fee (newer to lottery) will convert at a rate less than people think, given the cost, the economy, the farther they are from needing to sell/refi, the lower their near-term expectations were of converting anyway, etc….
“The real problem with this legislation is that it reduces affordability for future buyers”
I disagree – TIC’s are only cheaper if you don’t need a loan. Condo loans are roughly 2% cheaper which is roughly equivalent to 20% less in carrying costs. You also don’t need to spend money on the lottery or on condo conversion fees. So turning more TIC’s into Condos should help with affordability when buyers get to buy them with cheaper loans and won’t have new fees in the future. Plus, more Condo inventory on the market will also provide downward price pressure on condos. So if you are an advocate for more affordable home ownership opportunities you should be in favor of this.
Of course that isn’t really your concern, is it? You’re whining yourself, and clearly a renter – meanwhile, you knew it was a rental going in, you knew you were not the owner, and so why whine when the owner of an asset you are borrowing usage of wishes to change something about their asset?
and the government “interference” you seem to be concerned about…. that’s how we got into the mess we’re in SF to begin with – so if you’re against “interference” lets get rid of all the rules and have it be a market driven market. but you’re really not for that either, are you?
How much impact will this really have? I have friends who are trying to convert their 2-unit TIC into condos. Sounds easy, right? Sure, until you realize that you need to get 2 new mortgages.
They bought during the bubble and the appraisals aren’t coming in high enough to avoid a massive payment to get equity ratio within limits. They are both professionals, making good money. The requirement that they pay high 5 figures to low 6 figures in cash is preventing the conversion from going through.
How many TICs bought during the boom would fall into a similar situation?
“and at way too much of a bargain for the speculators who bought TICs.”
this assumption — that all san francisco real estate (in this case, TICs) is purchased by evil speculators — is the fallacy that gives too many people in this city license to villify anyone with the audacity to try and buy property in town. the board o’ supes has been so successful at creating a landlord/property owner bogeyman that reasoned debate on ownership issues is not longer possible.
savvy work by daly, avalos, et. al — with the vocal support of the entitled renter class (not all renters, just the ones who come, stay for a few years, make a lot of noise then retreat to a simpler place, some place like fairfield, perhaps, when they get married/have kids). The perceived reality they’ve sold to San Francisco makes shades of gray unnecessary.
hence, all TIC buyers are “speculators.”
Q- they should do everything incl recording the condo map. From the city’s perspective, their condo conversion is done. The only thing they should not do, is to record cc&r’s, as that probably trigger a refi. That way they effectively finish the conversion, but do not ptriggerba mandatory refi. Best solution, IMO.
Q- they should do everything incl recording the condo map. From the city’s perspective, their condo conversion is done. The only thing they should not do, is to record cc&r’s, as that probably trigger a refi. That way they effectively finish the conversion, but do not ptriggerba mandatory refi. Best solution, IMO.