The San Francisco Business Times:  Moving in on Condos -- Owners Fear City Will Add Red Tape to Conversions

By Eric Young

November 11-17, 2005 — A proposal expected to go before a San Francisco supervisors committee would require that more apartment buildings get Planning Commission approval before converting to condominiums – a change opponents say complicates an already difficult process.

Supervisor Chris Daly authored the legislation, saying that some renters are being evicted to allow building owners to convert apartments to condos and cash in on the city's hot housing market.

Specifically, Daly's proposal calls for Planning Commission hearings when buildings of two or more units apply for condo conversion. Those hearings are only held for apartment buildings of five or more units now.

Requiring smaller buildings to have Planning Commission hearings subjects them to greater scrutiny. Under city law, the Planning Commission can reject a condo conversion if building owners evicted renters to convert the building or if elderly or disabled tenants were evicted.

"Getting a hearing at planning helps bring these buildings out in the open more," said Ted Gullickson, a spokesperson for the San Francisco Tenants Union, which backs Daly's proposal.

In a city where only about one-third of the population owns a house, condo conversions have become a popular way for building owners to cash in and for some residents to afford their own place. But tenants groups are concerned that evictions from rent-controlled apartments are paving the way for many conversions.

Building owners said they object to Daly's proposal. "It's another monkey wrench thrown into an already screwed-up process," said Randy Brasche, head of the San Francisco TIC Coalition, a group of homebuyers. Building owners said they fear Daly's proposal might make it more likely that planning commissioners would reject conversions.

Condominium conversions generally follow this process: Apartment buildings become so-called "tenancies in common" where renters agree to buy their units or new buyers occupy those units. TICs are risky financial arrangements because the building's tenants jointly own the building, meaning if one owner defaults the other owners must make up the difference. Many TICs enter into the city's condo lottery to convert to condominiums, a less risky investment. The city allows 200 units to convert to condos per year and it can take years to get selected in the lottery. The most recent lottery attracted 1,512 units.

Daly's proposal is pending before the city's Land Use Committee. It has not been given a date for a hearing.


Eric Young covers government for the San Francisco Business Times.