Update 5:50 p.m. Alex Emslie reports that as expected, the version of the TIC condo conversion ordinance backed by Supervisor David Chiu was initially approved by the Board of Supervisors, and that the version backed by Supervisor Mark Farrell failed. More on the vote from the Chronicle, which makes the point that the eight votes in favor are enough to override a mayoral veto, though Ed Lee has not said yet whether he will sign the legislation into law. The board still has to give its final approval, which is expected.

Original post

The San Francisco Board of Supervisors is heading for a vote Tuesday on dueling ordinances to increase the number of tenants-in-common units that can convert to condominiums.

Tim Denike is one of the many tenancy-in-common owners in San Francisco who hope to convert their units to condominiums. (Sam Harnett/KQED)
Tim Denike is one of the many tenancy-in-common owners in San Francisco who hope to convert their units to condominiums. (Sam Harnett/KQED)

The city’s office of the controller estimates that about 1,730 units would convert under the terms of either ordinance.

An ordinance supported by Mark Farrell and Scott Wiener appears less likely to pass than a more restrictive ordinance backed by David Chiu, Norman Yee and Jane Kim.

Both proposed laws have undergone substantial change since Farrell’s original proposal.

Farrell wanted to change the current system because it allows only 200 TIC units, chosen by lottery, to convert per year. Many more unit owners would like to convert. Tenants groups worry that allowing more conversions will reduce the amount of rental housing available.

The two alternative ordinances up for debate are alike in almost every way:

For seven years, they would allow eligible buildings to convert if the owners pay a fee of up to $20,000 per unit. Among other criteria, for a building to be eligible a minimum number of units must be occupied by owners applying for conversion: at least one unit in buildings of four units, and at least half the units in buildings of five or six units.

(Buildings with more than six units have not been eligible for conversion since the original ordinance passed.)

The units would be allowed to convert in the order that they have been on the waiting list, with about 800 to 1,000 units in the first year, then about 500 in the second year, and fewer in each of the subsequent years.

Fees would be lower depending on the length of time units have been on the waiting list as well, with a minimum of $4,000 per unit.

The hope would be to work through a backlog of about 2,269 units over seven years.

The lottery would be suspended for at least 10 years. It could be suspended for an even longer period if the city determines that rental housing is insufficient.

When the lottery resumes, eligibility would be more restrictive: Only buildings of four units or fewer could convert. Buildings of two units must have at least one unit occupied by an owner. Buildings of three units must have at least two units occupied by owners. And buildings of four units must have at least three units occupied by the owners.

The two ordinances differ in one key respect: When the lottery resumes, Farrell’s version would allow a new owner-occupant to take the place of someone who left, allowing a building to keep its place on the conversion waiting list.

Why all the interest in condo conversion?

The city allows only buildings owned by tenants-in-common to convert to condominiums. In this arrangement, occupants of a building own the entire building together. They are more limited in the kinds of home loans they can obtain because the risk of making a loan to multiple borrowers is considered greater than making a loan to a single borrower.

That has prevented tenants from refinancing to take advantage of lower rates. As a result, many tenants-in-common want to convert to condominiums in which they can own their own units and apply for separate loans.

But if more tenants-in-common buildings convert to condominiums, that in turn could spur more apartments to convert to TICs, reducing the amount of rental housing in the city.

Negotiations have been difficult.

Apartment renters and tenant-in-common owners have both been outspoken about how the changes might affect them.

Update 6:20 p.m.

Here are the roll calls of the votes:

Votes for Chiu Version: Passed

Kim – Y
Mar – Y
Tang – N
Wiener – N
Yee – Y
Avalos – Y
Breed – Y
Campos – Y
Chiu – Y
Cohen – Y
Farrell – N

Votes for Farrell Version: Failed

Kim – N
Mar – N
Tang – Y
Wiener – Y
Yee – N
Avalos – N
Breed – Y
Campos – N
Chiu – N
Cohen – N
Farrell – Y

San Francisco Supervisors Pass TIC Condo Conversion Expansion 11 June,2013Laird Harrison

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