Condo conversions were a big controversy a few years ago, but since then, have pretty much faded off the radar of everyone but professional affordable housing activists and developers. Now the issue is back, sort of.
Councilmembers Pat Kernighan and Rebecca Kaplan have introduced a proposal to make some changes to Oakland’s condo conversion rules (PDF), which will be considered at today’s Community and Economic Development Committee meeting (PDF).
Basically, sometimes apartment building owners decide they don’t want to own an apartment anymore and would like to turn their building into condominiums and sell the units off individually. In Oakland, however, this is not the easiest thing to do for most buildings. A 1981 law, designed to ensure a robust supply of rental housing, prohibits the conversion of an apartment building greater than four units into condominiums unless you have something called “conversion rights.”
In practice, conversion rights are a little silly. Basically, when someone builds a new apartment building, each unit gives them one conversion right. Then if someone else wants to convert their apartment building into condos, they go and buy the conversion rights needed to do so. So if I have a 20 unit apartment building I want to turn into condos, I have to go find someone who built at least 20 rental units and buy the conversion rights from him. In certain parts of the City, you can only buy conversion rights from buildings that are in the same area. The idea is, again, to guarantee that we preserve an adequate supply of rental housing, and to protect tenants from displacement if their apartments are converted.
The proposal (PDF) introduced by Councilmembers Kernighan and Kaplan would create a “Pilot Program” that allows up to 300 units in “higher rent” apartment buildings (buildings where the average rent for new tenants in the past two years has been over $2100 a month) to be converted over a period of two years without purchasing conversion rights. Instead, the building owner would pay the City a $15,000 per-unit fee for the conversions. Then after two years, it would be over.
Existing tenants in the buildings that want to convert would all have to be offered a rent controlled lifetime lease and units where tenants choose to take the lifetime lease could not be sold. If tenants choose to move instead of taking the lifetime lease, they wouldn’t get any money to help pay re-location costs. If tenants want to buy their apartment as a condo, they would get a 10% discount.
The fees paid to the City for the conversion rights would go to rehab of existing affordable housing. Additionally, the proposal would create more money for the City by creating a bunch of new condos, which will each be paying property taxes, transfer tax when they are sold, and parcel taxes.
There are two other features of the proposal, which I won’t get into that much right now. One would make it easier to convert some Tenant-in-Common properties to condos, and the other would clarify existing law to make it clear that if you build a new rental apartment building and then decide you want to convert it to condos, you’re allowed to use your own conversion rights to do so.
Anyway, Councilmembers Jane Brunner, Nancy Nadel, and Jean Quan do not like the proposal, and have introduced one of their own. Unlike Councilmembers Kernighan and Kaplan, they do not offer any explanation their rationale or analysis of the impacts of their proposed legislation. Instead, they submitted a simple chart outlining the highlights of some plan they want staff to turn into legislation. You can read the whole thing here (PDF). The key points are:
- Expand existing condo conversion ordinance so that it applies to buildings of 4 units or less, which it currently does not
- Cap conversions at 150 units per year and 150 units per Council district over 5 years
- 6 months notification, 15% discount, lifetime leases and first right of refusal for purchase for existing tenants in buildings to be converted
- The same inclusionary zoning proposal that keeps coming up before the Council and failing
The plan proposed by Councilmembers Brunner, Nadel, and Quan is not really worth commenting on now. I have written extensively in the past about inclusionary zoning, which is a tired, counterproductive, and failed concept (and appears to now be illegal for rental housing, although rental IZ is not part of their current proposal), and also totally irrelevant to the condo conversion issue currently on the table.
As for the limited conversion proposal from Councilmembers Kernighan and Kaplan, I find little to complain about. A supplemental report from CEDA staff (PDF) raises some legitimate questions about the proposed definition of “higher rent buildings” and potential obstacles to assessing the proposed impact fee, and those issues certainly deserve further discussion at Committee.
The report further criticizes the proposal for acting in isolation, instead of being part of a “comprehensive housing strategy,” which I think is just ridiculous. No, this isn’t a comprehensive housing strategy, it’s limited legislation intended to address limited issues, which is just fine. Not every single thing the City does has to be part of some overarching, long-term plan to address some giant issue. When you insist on doing things that way, nothing ever gets done.
Sure, I think it might be a little silly to go to all this trouble basically so one luxury apartment building can be converted into condos, but that’s really the fault of the people trying to tack all these other issues onto something limited and very specific. Like six people forwarded me this “action alert” from EBHO yesterday that hysterically claims:
The Oakland People’s Housing Coalition (OPHC) opposes Councilmember Kernighan’s condo conversion proposal as a bad deal for the city and a bad deal for tenants and affordable housing. Their proposal, if adopted, would create no new housing and would threaten displacement for low-income seniors and people with disabilities.
It doesn’t explain how, of course. The purpose of the condo conversion ordinance is to protect the supply of rental housing that is within the means of most people, and whether you agree with that goal or not, it’s hard to see how the poor renter in Oakland are going to be harmed by having ultra-expensive apartment buildings on the Lake become ultra-expensive condo buildings on the Lake. The protections for building’s existing tenants seem sufficient to me, although some form of relocation assistance would be nice and I don’t think too burdensome for the building owner.
The deplorable condition of much of Oakland’s affordable rental housing is as serious an issue as the supply, and to the extent that this proposal can supply some funds for rehabilitation, I think it’s a good thing. Additionally, the City’s revenue problems are not going away anytime in the near future, and this also provides a way to bring in more money for the City (PDF) (I think the estimates in that document are probably a little inflated, but the point remains that it’s a significant amount of money).
The Community and Economic Development Committee meets at 2 PM this afternoon. If you can’t make it down to City Hall, you can always catch it on KTOP, Comcast cable Channel 10 and available streaming online. I will be tweeting the meeting, so for real-time updates, you can always check out twitter.com/vsmoothe or follow the #oakmtg hashtag to get updates from others as well. (If anyone else tweets it, that is. Sometimes I’m the only one.)