Real Estate

City knocks homeowners with TIC deal

On June 11, the San Francisco Board of Supervisors voted to change the tenants-in-common (TIC) condo conversion system. But they took a bill to enable a larger-than-normal group of TIC owners to become condo owners and turned it into a bill that will all but kill condo conversions for the foreseeable future.

KQED News headlined its report “San Francisco Supervisors Pass TIC Condo Conversion Expansion,” and that’s certainly how the veto-proof eight-vote majority of the board would like it sold. But what the majority, led by Board President David Chiu, did was play opposites. They turned around the entire intent of the bill, originally sponsored by supervisors Mark Farrell and Scott Wiener, both of whom ended up disowning the bill and voting against it, joined only by their colleague Katy Tang.

As we noted in the Marina Times in May, Farrell and Wiener were trying to help TIC owners convert to fixed-rate mortgages and get out of an economic squeeze caused by the joint-financing arrangements of TICs. Basically, they would have allowed a couple thousand TIC owners to convert, instead of the 200 annual conversions allowed in the city’s lottery.

Chiu & Co. instead allow about 2,200 TIC conversions over a seven-year period, but they also taketh away with the other hand, shutting down the lottery until at least 2024 (thus we’re really still at about 200 conversions a year) and including what Farrell rightly derided as a “poison pill” provision that would stop conversions and the lottery altogether if even a single lawsuit is filed against the measure. Yes, a single lawsuit. In San Francisco.

There are indeed hardcore renter advocates, but there is someone else this whole debacle helps: Homeowners who like to talk about how much they care about low-income renters, but what they really care about is ensuring that their own property values continue to rise to spectacular heights. The fewer condos that can be created by conversion or construction, the fewer San Franciscans who can make a first step into homeownership. That means ever more people bidding for the already small inventory of for-sale homes in this town, which pushes up all prices and valuations. And that also hurts the ability of owners or developers to get property to rent out at affordable rates.

It’s a win for self-righteousness, and a loss for the city.

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