tv [untitled] February 4, 2013 8:30am-9:00am PST
already in the pot. they were already in process. >> co-chair kim: that's a an amazing job, over double the units. maybe the numbers i have are not completely correct but i noticed between three to six units, that sometimes they're -- over 200 units were converted. maybe my numbers are wrong, but i wonder how that might happen. between three or six there's always 200 or less, there's no exceptions that go through? >> not for residential conversions. it's always 200 or less. >> co-chair kim: okay. so i'd be curious to know in 2009, you had 141 three-unit buildings, 132 four-unit buildings and 22 five to six units that were converted. am i reading that incorrectly?
>> i don't... i suspect you're looking at -- there's probably conversions in there and new construction. new construction -- >> co-chair kim: i see. so new construction is also included in that as well. >> i'm not sure where those stats came from but i can assure you that 200 -- no more than 200 units a year get converted from existing residential units. >> co-chair kim: okay. thank you very much. >> sure. >> chair wiener: president chiu. >> supervisor chiu: a couple of additional follow-up questions to supervisor kim's questions. this is either to the controller's office or to the author of the legislation around the -- how the fee was set. when i looked at the controller's nexus study on how this was done, i understand this proposal creates a $20,000 conversion fee. and what the nexus study suggests is that that would be a potential fee that could be justified for $300,000 t.i.c.,
but for $400,000 t.i.c. the nexus study suggests that you could have a conversion fee of about $30,000 and for a half a million, $500,000 t.i.c. the nexus study suggests potential conversion fee up to $35,000. when you add that to the fact that this legislation allows for the $20,000 fee to be reduced by up to 80%, depending on where folks are in the lottery, in other words there are individuals that could go through and pay $400,000 and allow -- $4,000 and allow -- how did you peg the 20,000 and why did you choose a scale that allowed up to 80% to be taken off? >> thank you, president chiu, for that question. i think the bottom line is we did extensive outreach into the t.i.c. community to understand what fee levels would they say we don't want to take advantage of this, this legislation would be meaningless in terms there would be no people that would
apply for this and pay the fees, they would rather go through the lottery, and also something that basically was not -- did not cost much money at all so it would be a given that they would apply. so we wanted to strike a balance between getting a fee that was high enough and reasonable, that would support our affordable housing community but something that was in reason so t.i.c. owners would take advantage ever it. we've heard the 20,000 fee is too high and they wouldn't go forward with that. it was a balancing act. this is a subjective division under the cap that the nexus study provided. >> supervisor chiu: i think we received communication from the affordable housing community, a letter from the council of community housing organizations that where the fee is set could reduce the affordable housing funding? >> essentially, the affordable housing community has suggested that where this fee is set could actually end up reducing support and funding for affordable
housing because it again makes -- it doesn't create enough of a fee to make -- to create the proper incentives for folks to assist with affordable housing. >> i would be happy to speak with them or if you have more details, i don't believe in that earmt but happy to have that dialogue. >> supervisor chiu: to our city attorney on the questions around the protections that were put in place for tenants at say parkmerced versus the protections put in place here, first of all i definitely appreciate -- i want to say this to the supporters of this ordinance, life long leases, i think that was an important aspect of what you're proposing in the legislation but my recollection in parkmerced is in addition to the life long leases that were provided in that agreement because there are questions that were laid out around potential legal issues, in addition to the life long leases the developer in parkmerced was required to create an affordable --
essentially a fund of money that, if there are any legal issues or any legal challenges to these life long leases, the developer, parkmerced was required to set aside almost $200 million to compensate future tenants in case there were any issues and i wanted to just clarify, was a concept like that ever contemplated for this legislation? to me it strikes me that the protections for tenants in this measure are actually a bit less than what we did in parkmerced. >> john malamut from the city attorney's office. i was only tangentially involved with the parkmerced project but that project involved a development agreement, which is a recognized process in the california governmental code that allows seaptionzl essentiay and the developer to negotiate a deal without necessarily having
fees be justified by a nexus study. so the agreement, which it sounds like you're mentioning, is something that we could ask for as part of a negotiated contract with the developer. in this particular case, the nexus analysis only supported the base fee that we were discussing about having moneys go into one of the city's affordable housing programs. >> supervisor chiu: okay. and one final question, again probably to the author of the legislation. i think there's no one here who doesn't have sympathy for the challenging financial situation facing current t.i.c. owners. i think a concern that's been raised and one that i have, and would like to get an initial sense from supervisor farrell and others, i think even if we were to allow the current generation of t.i.c. owners to allow them to condoize, the concern is that we would quickly
replace them with a new generation of t.i.c. owners, and potentially additional real estate speculation that could lead us right back to an identical debate within a short period of time and that's fundamentally an issue that i have with this particular proposal. and i would love an initial i guess comment on that, and certainly if there are suggestions from the public on this but to me that seems to be a fundmental piece that i wish was addressed by the legislation. >> chair wiener: president chiu, that is inherently speculation, nobody knows. to believe one side or another to me is something that we should not be doing. two things that i would articulate. first of all owner occupancy rules dictate there needs to be owner occupancy for a number of years before this is to be eligible for the condo lottery. in most instances it's three years for a certain amount of tenants for larger buildings it
gets more complicated. the even potential chance for that to happen is years down the road. second of all what i would articulate is -- and ask any of the t.i.c. owners that speak with us today -- the desirability of t.i.c.s especially because of the financing market over the last few years has gone down significantly. i've had a significant number of friends, people in my community that own t.i.c.s that when they try to sell them is much more challenging. so i would suggest the desirability of these units going forward would be significantly reduced. >> chair wiener: thank you. did you have more comments? >> supervisor chiu: i had one reaction or comment. i think that supervisor farrell's observation that the desirability of t.i.c.s might be reduced, that very well might be the case. i know there have been some suggestions of is there's way to
take care of the current generation of t.i.c. owners but essentially move us away from what is clearly a fairly broken and controversial system that we have now. and i'm curious about people's reaction to that and i have a feeling it will likely be ongoing conversations about that. but if it is true that this will no longer be a path that is desirable, the question then remains, well should we continue to allow this path but we will have that discussion. >> chair wiener: supervisor farrell? supervisor kim. >> co-chair kim: i wanted to make a comment on that as well. while it may be speculation that legislation, such as a bypass, would spur more t.i.c. ownership over the next five, 10 years, it's still a poblth. possibility. if it could happen is there a way to safeguard against that. many of us are concerned with current t.i.c. owners. i disagree with the comment that
they get demonized in san francisco. the groups that get demonized are the groups that encourage residents to go down this pathway. the solution is to build more units. unfortunately banking institutions create a financial tool by which people could buy entire buildings and decrease our rent control housing stock. what's unfortunate about this debate is we have two groups of folks here, both worthy of our attention and of course of our commitment and they are our renters, many of whom are low income and moderate income, homeowners. but i think many are demonizing the t.i.c. owners. i have friends who are t.i.c. owners as well. i think in the long-term if we're going to have a conversation about how to help the current generation of t.i.c. owners we have to have a
conversation about how we prevent i would say kind of an overcapacityityization. we don't want to encourage banks and realtors to say san francisco is letting this bypass happen, it's going to happen in five years, so buy up today. i don't want to say cannibalize, but they will cannibalize our housing stock which is important to affordable housing in san francisco as much as our affordable housing program as well. >> chair wiener: thank you. i just have one question for mr. stores, and if there are no other comments we will get to public comment. just following up on a question that supervisor kim had for you a while ago about dpw's enforcement staff and understanding that in many different areas dpw doesn't have as much enforcement capacity as it should. right now, there are of course lifetime leases -- this isn't a brand new concept, that we have lifetime leases for senior and
disabled tenants in converted buildings, correct? >> correct. >> chair wiener: and so if someone -- there are lifetime leases that exist currently in san francisco, and if someone believes that that lifetime lease is being violated, they can come to the department of public works and file a complaint? >> we don't maintain -- we don't adjudicate them at all. as far as i know that's either the mayor's office of housing or the rent board. >> chair wiener: so whatever process is used for current complaints about violating lifetime leases, the same process would apply for these lifetime leases. >> i'm not sure how to answer that. it's not really outlined in the the legislation. >> chair wiener: right. but the concept of a lifetime lease exists in san francisco law already. >> yes. >> chair wiener: and so this is not some sort of -- we're applying it beyond senior and disabled now but this is a
lifetime lease and we have a lifetime lease in the law that's been in the law for quite some time. >> yes. >> chair wiener: thank you. okay, colleagues. if there are no other questions or comments, we will open it up to public comment. public comment will be two minutes. when you have 30 seconds left, you will hear a soft bell. when your time is up, you'll hear a louder bell. if you could please wind up. i'll call a group of people at a time. you don't have to line up in the exact order that i call you and proceed as one speaker ends, the next speaker can walk up to the mic. and if i do call anyone in the overflow rooms, please come into the board chamber. and if there's anyone who, because of a physical need or they have children with them, they need to speak early. you can just go ahead and line up without my having called you. we want to accommodate you. so i'll call the first batch of
names. nancy mcnally -- and i apologize in advance. for i'm sure the numerous names i will butcher today, some because of hand writings and others because of other writin writings. iway sue, mainly sato, mark bridges, jaime alvarez, kenneth laverne, jane fox, jeremy michaels, donna safyoti johnson, renee givens, don hoe, max feraso, kelly, mark bridges, karen babette and sue vaughan. the first speaker can walk up.
the first speaker can please... will the first speaker please walk up and be in public comme comment. >> [speaking foreign language] >> translator: i want to speak quickly because i have to pick up my son. my name is chin lo. i think all the citizens who are here has a goal. our goal is to live happily in san francisco. and we are very fortunate to live in san francisco. but in san francisco right now, living in san francisco has a pressure on us.
first is the rent is too high. and for homeowners, the price is too high. the mortgage is too high. so right here, we just want to let the city know about our thoughts. so we hope everyone will support this proposal. if this proposal is passed, the tenants would be able to get a piece of fund to afford their housing. and our living in san francisco would be a little bit relaxed.
and also the next generation of our tenants will be able to purchase housing in san francisco at a lower price. and as homeowners, we like our next generation to be able to purchase housing at a lower price too. all i know is that all this benefits will pass down to our next generation. whether you are tenants or homeowners, i am calling everyone to support this proposal. so that we, and our next generation, can live happily in
san francisco is an immigration city. we need a lot of government support in housing. there are 50 of us coming here to support this proposal. i hope all supervisors will support this t.i.c. to be successful. >> co-chair kim: i have a question for the speaker. are you a t.i.c. owner? >> translator: no. >> co-chair kim: i'm curious as to why you're speaking on behalf of friends that are t.i.c. owners or if you're not
one yourself, because this doesn't impact t.i.c. owners in the future that may be looking to buy. this is purely for those that currently have participated in the 2012-2013 lottery. >> translator: because i have many neighbors, and relatives. they all have that need. i volunteer in visitacion valley for over 20 years. thank you. >> chair wiener: thank you. thank you. if i could just remind, we -- again, no audible applause, booing, hissing. if you want to raise your hand to express aroofl, that's --
approval, that's great. next speaker. >> my name is kenneth laverne, i live in district 8. i'm a renter. i live on social security. i'm disabled. i think supervisors are well aware that the real estate market is red hot again right now, and there are great pressures on renters to be removed from units. i think this is another tool in the toolbox of landlords and real estate interest, to remove us from our units. i've been in my unit since 1988. i could not live in san francisco without this -- without living in rent control, and living in this unit. if i moved, my rent would triple or quadruple. i don't believe there's any enforcement in -- i don't think that the lifetime leases, from what i've seen today, from dpw,
and the city attorney, that there are any real enforcement mechanisms. regardless of whether this would conflict with state law, the costa hawkins law, or ellis law. from what i've seen is the city attorney and dpw are in a state of confusion about who would enforce this, and whether they even have staff or finances to do so. so this law is being proposed without any thorough thinking-through of the enforcement mechanism. who would do it, and whether there's any resources to do it. and i agree that there are a lot less provisions for lifetime leases in this than there have been in parkmerced. mr. farrell, this does open the door to speculation. yes, there is speculation but
that is why it's called speculation. and i will do everything in my power to defeat, in the next election, supervisors who vote for this law. >> chair wiener: thank you. next speaker. >> i'm here -- my name is david wallace and i'm a t.i.c. owner and i'm here to ask you to support this legislation. this legislation will have a huge impact on my future, and ability to afford my home. originally, my t.i.c. held a group loan to reform -- financial. thorn bird collapsed in 2008 and my loan was sold. it was well known that before thornberg collapsed, they allowed transfer of our group loans in the interest of thornberg and t.i.c.'s qualified buyers. after the collapse my loan was sold and no longer transferable. one of our owners was transferred out of the san francisco to san diego.
she tried to sell, and at this point we all realized that we had to refinance, with a great burden to us, caused a lot of stress in our t.i.c. i was looking at coming up with $70,000 to refinance, out of my 401-k. my future, everything that i had in the building, and taking money from my retirement plan. if we don't address these issues, we're going to see a collapse of the t.i.c. market. and the other thing i'd like to address is people are saying that we're not demonized. i've had discussions on facebook about this, social networking, and i can't tell you how misinformed people are, and how angry they are, and how they demonize me on this discussion. so i am being demonized. thank you. >> chair wiener: thank you. next speaker please.
>> i wanted to know if my number is wrong but my understanding is homeowners is average of $500,000 to purchase something here. and for most of us, that's way unaffordable. so i would like to say that we really need, as humans, to be protecting people at the bottom, not people who can afford a half million dollar home. also i would like to say that with limited housing, i don't really understand the logic of how we are going to protect renters and owner occupied. i would say protection for tenants currently living in a building that's quertsdz, that's temporary. housing is very temporary. people move a lot. that doesn't really solve the issue of long-term. also i would like to say i'm a council for the tenants union by the way and i have seen many tenants being harassed and evicted, whether there's potential of owner occupancy it will happen and we will lose
tenants who provided services that we moved here for. also, i understand what i heard was that the suggestion was the rent board was going to adjudicate these lifetime leases. the rent board is swamped. i heard from a tenant who said it took six months to get a actual -- something from the judge. by that time, if you have illegal rent increase you can't even live here anymore so that is not practical. we need to have something that helps the people that really need help here, not people who have middle income. thank you. >> chair wiener: thank you. next speaker. >> my name is jeremy michaels, and i'm a gay senior living with aids. i've lived in the castro for nearly four decades and i'm now being evicted from my apartment of 18 years by real estate speculators through use of the ellis act to likely create t.i.c.s and like many with no other place in san franciscoy i can afford to live.
i'm against this condo converse legislation. condo conversions were limited in 1981 to 200 annually because of a dramatic increase and cannibalization in the housing stock a trend which unfortunately continues today. real estate lobbyists tried twice to repeal these by proposition but both times were soundly defeated by voters. i consider the proposed legislation with its dubious claim of proavmenting low income housing as an attempt to do away with these limits and a end run around of the voters. allowing mass condo conversions will encourage more real estate speculation, and more t.i.c.s at the expense of less affluent renters and is not good or moral public policy. while i have sympathy for t.i.c. owners in regards to their financial situation, i think this is -- that that is better
served by going after the banks, you know, and not other renters. my opinion. >> chair wiener: thank you very much. next speaker please. >> i want to introduce myself, i'm mark bridges, and i want to thank the supervisors for taking time to listen to us. but before i really tell you about myself, i want to tell you who i'm not and i'm not a house flipper, imnot a real estate agent, a builder, contractor or speculator. i am a middle class dad, married father, with three children, chloe, age 1 -- and i've been living in district 5, after finishing up law school in '98 and have lived in a three unit t.i.c. building for 10 years. it's my first home. i purchased it along with two other families because we wanted
homeownersship. i wanted a stake in the city. i wanted to stay here and raise my family but i couldn't afford a single family house or condo or a two unit condo, because those were priced at condo rates. i wish i could have. unfortunately, it appears, in all respect that i do have a condo but merely i just have an interest in the t.i.c. and as such i'm forced to be on a jumbo loan with two other families. we're tied together financially and stuck in a loan that we can't get out of. we can't take advantage of the historic low interest rates, instead of having individual folks, that have single family or condo owners. we can't stabilize our finishes or plan for the -- finances or plan for the future because our loan is variable and subject to the market volatility. don't let the opposition tell you that this will cause rent to go up