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Condo Bypass about to die

by Rob Regan on June 5, 2013

We saw this one coming a mile away.  To think the tenant’s union was ever serious about letting San Francisco TIC owners convert to Condos via a “bypass” was plain foolish.  The signs have all been there for months now.  I hate being right about this because I have clients who would have benefited, but every single time I heard another agent tell a potential buyer of a TIC that the bypass had a chance, I cringed.  Sure enough, this looks totally dead now per the below email I just received:

 

AMENDED CONDO BYPASS LEGISLATION IS A WOLF IN SHEEP’S CLOTHING

At the most recent Land Use Committee meeting on June 4, the committee voted to approve (2-1) the Yee/Chiu Amended Condo Bypass legislation for a vote before the Board of Supervisors on Tuesday, June 11. The goal of the original legislation was to help the 2,000+ current TIC owners to access historically low interest rates. The amended legislation has perverted the original legislation into one that would help these 2,000 TIC owners at the expense of all future condo lottery participants. The amended legislation MUST be opposed because it will permanently cripple the condo lottery by:

  • Suspending the condo lottery for 10 years, no matter how few TICs elect to go through the condo bypass;
  • Creating a “Poison Pill” whereby if anyone sues to challenge the legislation, the condo bypass and the condo lottery are automatically suspended until the litigation is resolved;
  • Preventing qualification for other TIC owners for 3 years from the condo lottery if just one OMI eviction is done;
  • Removing 5- and 6-unit buildings from the condo lottery when it resumes in 10 years; and
  • Increasing the owner occupancy requirements for 3- and 4-unit buildings to qualify for the condo lottery to 2 owners to live in 3-unit buildings and 3 owners to live in 4-unit buildings for 3 years.

The amended legislation effectively eliminates 4-unit buildings from the condo lottery because it would be impossible for a 4-unit building to maintain the same three owner occupancy requirement over the years it would take to win the condo lottery. Buildings of 4, 5 and 6 units are a very important part of the inventory of potential first-time, homeowner housing stock.  As an example, if this legislation were in effect last year, it would have eliminated 47.4% of the units in the lottery.

It is not an exaggeration to say that this legislation will significantly harm the TIC market, an important source of relatively affordable, first-time, homeowner housing stock.

Please let your Supervisors know that the amended legislation hurts homeownership. It only attempts to help current TIC owners as a cover to destroy the condo lottery. In particular, let Board President David Chiu and Supervisor Norman Yee know that you oppose the legislation as amended. They can be contacted at:

David Chiu – David.Chiu@sfgov.org – (415) 554-7450

Norman Yee – Norman.Yee@sfgov.org – (415) 554-6516

If you live or work in District 10, let Supervisor Malia Cohen know that the amended legislation is a wolf in sheep’s clothing.

Malia Cohen – Malia.Cohen@sfgov.org – (415) 554-7670

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