Upheld by San Francisco’s Board of Supervisors and signed into effect by Mayor Ed Lee, the first round of applications for expedited condominium conversion in San Francisco are being accepted as of today.
As the program which is slated to suspend San Francisco’s annual condominium conversion lottery until at least 2024 goes into effect, word on the street is that the owners of a five-unit building are preparing a legal challenge of the program, the impact of which could bring the program to a premature halt (and shouldn’t catch any plugged-in people by surprise).
∙ Expedited Condominium Conversion Application: Group 1 [sfdpw.org]
∙ Condo Conversions: The Clock Is Ticking For The Mayor To Act [SocketSite]
∙ Potentially Problematic Condo Conversion Legislation Approved [SocketSite]
It’ll be interesting to see when the purported challengers bring suit. They could do the current folks going through the process a serious solid by waiting a bit. Any buildings that get tentative approval before a suit are going to be allowed to proceed to the finish line, and I’m certain there are lots of applications being submitted with that hope right at this very moment.
This is exactly what I predicted, but I agree it would be helpful for the 5 unit owner to wait a while and let some conversions go through before filing suit.
What would the basis be for the legal challenge?
Probably taking or something along those lines. 5 Unit buildings are being prevented from converting after a certain amount of time, so anybody who doesn’t qualify for conversion after the changes will have lost the ability to convert, thus lowering the value of their property.
IANAL so I could be completely wrong.
My understanding was that TICs established before 4/15/13 are eligible up to 6 units. So this is the individual owner of a 5 unit building? That would make sense, I guess. And from his or her perspective, why wait? If the first rush of 2,000 or so go through there will be a lot less pressure on anyone to fix the situation long-term in any fashion. Maximum leverage could be applied by freezing the process entirely.
Good point, it seems likely to be better for the owner to file suit early rather than later.
It won’t affect any “leverage” the actor has. The issue will be decided by the court, and it won’t matter whether there are people stalled by the action or not.
The truth is that the lawsuit will fail, it’s just a matter of whether it delays things for those moving through the process. The city has every right to do what it’s done w/r/t how it holds title and whether or not it makes available a path to change the way title is held.
I believe rabbits is talking about the leverage of pressure applied to our leadership to come up with a decent law that actually solves some problems, rather than this law, which only creates them.
If the conversions happen, then there are much fewer people who will care about a decent law.
Regardless of the validity of the lawsuit, it will delay things. That is the whole problem with the law that’s been changed.
It was obvious that it would cause a lawsuit, if not multiple lawsuits, which will possibly take years to resolve either way, thus delaying any.
Exactly. The plaintiff gets a bunch of very upset TIC owners now demanding a decent law straight away, which they should have gotten the last time around.
Any word on whether the City defaults to the old lottery while the lawsuits run their course? I had thought there was some question as to whether even the lottery would continue during that process.
I can’t imagine it would work out that way- why on earth would pending TIC owners want to campaign alongside plaintiff, the very actor who’s holding them hostage? Granted, it’s certainly not out of the realm of possibility that there’s a thickheaded enough megalomaniac out there that thinks it would work out that way.
It’s not that the TIC owners are trying to help the bringer of the lawsuit, it’s that they’ve been screwed, and the only available response is to get the law changed.
The filer of the lawsuit would possibly get the benefit of help (willing or unwilling) from other owners.
Machiavellian for sure, but the bringer of the suit has just been screwed by the city, and the only possible recourse is to either win a lawsuit, or get the law changed.
Per Goldstein and Gellman FAQ online brochure “New TIC Condominium Rules” (June 2013): This lawsuit may fit into the catogory of one of the 3 triggers to the “Poison Pill” which will cause condo conversion to cease.
If a lawsuit is filed challenging the lottery suspension
– No new applications will be accepted
– Projects with or without any tenants which have previously filed their application with the DPW and have already received Tentative Approval may complete their conversions.
– Projects with or without any tenants which have previously filed their application with the DPW and which successfully receive Tentative approval within 6 months following the date the suit is filed and served may complete their conversion.
– All other non-exempt conversions stop.
How does the law affect 2 unit conversions? Do they still convert of right?
According to Sirkin, 2 unit owner occupied (both units) may still convert. Everyone else must wait until 2024 to even apply and then must wait in line again.
“If a lawsuit” … A singular lawsuit triggers a poison pill. Pathetic.
Weiner should be utterly ashamed if himself. Whethe inadvertently or not, he created a monster. He backed away and allowed the thing to be gamed by the tenant’s union. Despicable.
Supervisor divided SF MUST GO. Stop the idiocy. Return to normalcy. Too many cooks spoil the soup.
zzzzzz – nothing about this new law affects the 2 unit building “fast-track” process.
rabbits — there are 3 poison pill provisions, all of which halt the expedited conversions AND the lottery. However, none of the 3 poison pills are related to a lawsuit over the elimination of 5 and 6 unit buildings from future conversion. The poison pills relate to 1) lawsuits about the lifetime lease provison, 2) lawsuits about the 10 year lottery suspension, and 2) lawsuits about both. I am very curious what happens if the lawsuit is solely about 5 and 6 unit buildings being excluded in the future. Does anyone here know?
^ good point J, IF they sue only for the future elimination of 5-6 unit bldgs.
Another possibility: any lawsuit may also trigger the quick disqualification of the poison pill amendments, as they are clearly on shaky grounds. So, a lawsuit may halt the city and then if the judge quickly knocks out the poison pills (while the rest of the case may take years to litigate) everyone can resume condo conversion.
I attended Andy Sirkin’s seminars 2 weeks ago about the new condo lottery bypass, and that is something that he postulated. Of course, he has an interest in processing condo apps for his business, but his thinking is sound in this case.
49yo hipster — I would prefer to not take Sirkin’s word as gospel, if only because they stand to make a ton of non-refundable money by signing up clients to condo convert in this process. So it is in their best interests to portray the lawsuits as not much of a threat.
With regards to your speculation about a lawsuit against the Poison Pill, that seems to be another gray area, since that isn’t specifically mentioned in the legislation. However, the poison pill is a no-win situation for those filing a lawsuit. If you file a lawsuit and lose, then you have held up the entire process for X number of years, AND you lost. If you file a lawsuit and win, then you have held up the process for X number of years, AND (according to the legislation): the lottery would remain suspended until 2024, the expedited process would be halted anyway, and the legislation would go back to the drawing board. So any of these lawsuits we’re talking about would be an absolute lose-lose for TIC owners.
J- I highly doubt that anyone who qualifies for the new “expedited conversion program” wants to sue. Why should they? They are virtually guaranteed conversion. It’s future people who will be buying bldgs that A- don’t qualify for the expedited Pgrm and B- have no idea when the lottery will resume. If one of these people files a lawsuit, it’s likely they will also include the poison pill aspect- their lawyer will know that this lawsuit will hurt people in the process, so it makes sense to ask the judge to a priori look at the poison pill. That could get overturned quickly.
A few years back idiot supervisor matt gonzolez passed some stupid pro tenant legislature, making it illegal for a landlords to talk to tenants about buy outs (harassment). That, and some other aspects were struck down quickly. The same could happen with the poison pill.
49yo hipster — I am not familiar with that old legislation you referred to, but obviously I hope you are right about the poison pill in general.
However, you misunderstood what I meant about the information from Sirkin. What I meant is that they are collecting non-refundable retainers from all of the people who currently are converting. So even if all of this grinds to a halt, they will still have their big retainer from all of these clients. So it is not in their best interests to be completely honest about how big of a threat these lawsuits would be. I am not saying that Sirkin is being dishonest — just that it would be in their best interests to paint a pretty optimistic picture of the current lawsuit situation.
Attorneys are prohibited from charging non-refundable retainers for this kind of work. We are required to deposit client funds in a state-supervised Client Trust Account, and may only pay ourselves from those funds if and when we do the work.