SFAA General Membership Meeting Notes 6/17/2013
Story of the moment is the recently passed condo lottery legislation…
As most of your already know, after much deliberation the SF Board of Supervisors voted in favor of the Chui/Yee amendments to the condo lottery legislation and is now waiting to be signed by the mayor into law.
The version of the legislation that passed is a far cry from the original draft by Supes Weiner and Farrell, both of whom abandoned the leg and voted against it.the summery points are as follows:
It’s really unfortunate that after the amount of work that both supes put into bringing some condo reform, that it would get hijacked in the last few weeks and rendered into an effective end of conversion.
Like all legislation whether local/state or federal; there is always the unintended consequence that manifests itself after some time.
This legislation is no exception to that rule. Absent a crystal ball, what this legislation effectively does is paint all future TICs with same brush. As a real estate agent I have worked with first time buyers on a number of occasions and have discussed the viability of TIC purchases to my clients.
My underlying message was that TICs are all different depending on # of units in bldg. years in the lottery, eviction history, type of financing available, etc.
Once you take away the ability or future opportunity to convert, you really remove many of the eviction constraints that kept TIC development in check to begin with!
Evictions of protected tenants through OMI or Ellis precluded lottery contention for 10 years by law which meant that those people had to be bought out of their units.
Many of those buy out packages paid tenants handsome relocation packages and provided an opportunity to pay off debts and do something for themselves and/or others.
Often times, this lump sum would be the largest financial transaction of their lives.
This will no longer be the case.
There is really no incentive for tic developers or any owner to play nice with tenants in an under market rental situation. When the sum of the parts is significantly greater than the whole, what incentive would one have to continue operation as an below market revenue apt. building.
Without the conversion eligibility to protect, I think you may see an increase in Ellis evictions and a continuation of the trend line in TIC sales in SF which is poised sharply up for the year.
Let me throw out some sales data…
Last year there were 356 total tic sales w/ $641K at $600 per foot.
This year, we have 164 sales YTD and 57 in contract; we on pace for 442 sales (up 24%) with average sales price of $749,529 (up 17%), from last year.
I recently had a client put his top floor tic unit on market for $699K and got multiple all cash offers over $830K. The immediate neighbor was thus compelled to sell their identical unit to the backup offeree.
Location always helps; 16th and Dolores is arguably one of the most sought after areas in town.
As long as interest rates remain low and lenders are willing to participate in the fractional ownership financing, then I think that facet of the market will remain healthy. There are currently 2 lenders that are doing fractional lending, Sterling and NCB, I have heard rumors that a well-known local banking institution may be considering getting into this market.
My prediction is that OMI and Ellis act evictions will increase to meet almost insatiable demand for home ownership in this city. TICs have been and will continue to provide the most affordable alternative for entry level housing. If this plays out as I’ve outlined, then the tenant lobby’s efforts to modify this legislation are going to hurt the very core of their constituency that they claim to protect. Thereafter, you will hear the anti-eviction rhetoric flare up and see further efforts to limit evictions and property rights. Let’s wait and see what happens but hope for a better result.
Rumors about AirBNB legislation, but we have not heard any details on that lately. The Mayor denies that legislation is being worked on, but it would certainly appear from a recent KQED interview that that he has been working on something for quite some time.
SFAA staff and board are monitoring this, we have stated our position regarding the illegality of the current action to all the relevant parties. You should not worry at this point because your lease agreement would override pending legislation.
The Parking Tax Amnesty deadline is coming up in 2 weeks, so if people are renting 5 spaces or less to nonresidents they have until 6/30 to register with the Tax Collector’s Office and will get all back taxes prior to 4/11 waived.
I cannot encourage you strongly enough to take advantage of this window of opportunity, while we have it. Since outside parking is not subject to rent increase constraints like apartments, you can recapture this additional operating expense through rent increase.
We had 2 workshops on with Recology staff on their pending rate increase in the past few weeks, and will have more soon. Your account will be reviewed to optimize it for container size and/pick up schedule. The short answer here is to reduce the black bin and increase the size of the blue bin.
The date of the SF Trophy Awards has been confirmed: Thurs 11/14/13, again at the Saint Regis Hotel like last year. We’ll be having a silent auction beforehand to benefit the SF Housing Foundation. Please put this one your calendar, it’s a great event to kick off the holidays.