No sympathy for TICs

02.11.13 - 11:23 am | Tim Redmond |

(153)

Got a fascinating letter from a local lawyer named Richard Hurlburt, who has some thoughts on the TIC-condo conversion legislation sponsored by Sups. Scott Wiener and Mark Farrell. He writes:

I’m a tenant’s rights lawyer and real estate broker. Whenever possible I help tenants facing eviction buy their TIC units. I also own and reside in a TIC unit. My building has twelve units and would not be affected by the proposed law.

I just read the actual text of the legislation sponsored by Sups. Farrell & Wiener and I’m against it.

TIC financing isn’t that difficult anymore. Fractional loans are the norm and not that much more expensive than condominium loans. It does cost a little more to finance a TIC, but the units cost less to begin with. So I don’t really see a hardship on the part of TIC owners who generally have smaller mortgages because they paid less for their units to start with.

The supposed $20,000 per unit condo conversion impact fee to benefit low-income housing is largely illusory. The proposed law contains a reduction for each year the building has participated in the lottery, so a building that participated in the lottery for five years, which is the majority, would get an 80% reduction and pay only $4,000.

Although the law would provide lifetime leases for the few tenants occupying converted units, this benefit is seriously disproportionate. For the tenants getting lifetime leases, good for them but that is a huge windfall for a very few lucky individuals. For tenants generally the legislation is actually quite bad. Once any of the affected units becomes vacant, all future tenants would be exempt from the rent increase protections of the Rent Ordinance. And allowing certain owners to bypass the condo lottery will only encourage more Ellis-TIC conversions.

Comments

Tim, that's hardly an unbiased source, is it?

This lawyer makes his living off TIC properties and so a large migration of them to condo will hurt his business. come on, Tim, you can do better than that.

Fractional loans are not a "norm" any more, and there are still only a few lenders offering them. One property that I am familiar with is currently refi'ing from one master loan to four fractional loans and it has already been over 4 months - twice the time it takes for a regular refi. and the rate is over 4% pa when sub 2% rates are available.

We owe these former tenants who took a risk a break, and this is one that harms nobody except TIC lawyers. A strange bedfellow for someone who claims to dislike TIC's huh?

Posted by Guest on Feb. 11, 2013 @ 12:10 pm

Bias

For the record, I don't actually make my living "off TIC properties." I'm a tenant rights lawyer. Occasionally, the circumstances are appropriate for my tenant client to purchase a TIC unit, and I assist them in the purchase. Otherwise, my client base does not include TIC owners. I am actually pro TIC in a way, as I own and live in one myself and I generally favor home ownership. I just don't think this particular legislation makes for sound housing policy. The "harm" the proposed law would supposedly address is not so compelling as to justify the harm it would do to tenants. /RH

Posted by Richard Hurlburt on Feb. 13, 2013 @ 11:43 am

You have identified no "harm" done by this proposal

The TIC owners benefit and nobody in SF suffers any harm

Posted by anon on Feb. 13, 2013 @ 12:39 pm

"For tenants generally the

"For tenants generally the legislation is actually quite bad. Once any of the affected units becomes vacant, all future tenants would be exempt from the rent increase protections of the Rent Ordinance. And allowing certain owners to bypass the condo lottery will only encourage more Ellis-TIC conversions." /RH

Posted by Richard Hurlburt on Feb. 13, 2013 @ 2:42 pm

The Rent Ordinance itself is

The Rent Ordinance itself is what is encouraging Ellis evictions.

It must be updated. Allow for more realistic annual increases and develop a rent voucher system which helps those who cannot afford the more realistic increases.

Posted by Guest on Feb. 13, 2013 @ 3:15 pm

Exactly. The number of Ellis evictions outside of a city with

rent control is easy to recall. It is zero.

Posted by Guest on Feb. 13, 2013 @ 4:13 pm

Fractional TIC financing

Fractional TIC financing eliminates much of the risk of the shared financing model and isn't that much more expensive than condo financing. Is this the SFBG's new take on this issue?

Posted by Guest on Feb. 11, 2013 @ 12:13 pm

Yes, it's official. SFBG now supports TIC's as long as they are

fractionally financed, and the legal work is done by their own tame lawyer.

Posted by Guest on Feb. 11, 2013 @ 12:53 pm

Stop the presses! An attorney

Stop the presses!

An attorney who specializes in TICs opposes converting TICs to condos!

Posted by Demented, Yet Terribly, Terribly, Persistent on Feb. 11, 2013 @ 12:39 pm

This is not the unbiased source that you are looking for

What...somebody with a vested interest in the legislation wrote to Tim and Tim automatically published the letter verbatim?

Were you expecting journalism here???

Posted by Troll on Feb. 11, 2013 @ 12:44 pm

Heh - nobody expects journalism here

We expect mindless partisan nonsense. And Tim rarely disappoints.

Posted by anon on Feb. 11, 2013 @ 1:01 pm

" I also own and reside in a

" I also own and reside in a TIC unit. My building has twelve units and would not be affected by the proposed law."

I think the lawyer is bitter because he cannot get in on this proposal since he is in on a 12unit building.

Posted by Guest on Feb. 11, 2013 @ 1:26 pm

Flat out lies

As a TIC owner, nothing about this "article" rings true. At the time my TIC partners and I refinanced to fractionalized loans last year, there was one bank in San Francisco offering that type of loan. How, exactly, is that "the norm"? The interest rate was at least 3% higher than a traditional condo loan. I would not characterize that as "not that much more expensive." Maybe 3% on a $500k loan isn't that much to Mr. Hurlburt, but it is to me.

Posted by Guest on Feb. 11, 2013 @ 1:31 pm

Let's Do the Numbers

TIC purchasers receive a $100,000 or more discount when they purchase the unit, compared to what it would cost to buy a comparable condominium. Obviously, this number varies, but often its even higher. The trade-off is it costs more to finance at TIC. Currently, TIC loans cost about 2.25% more. So, on a half million dollar loan, the higher interest results in payments of about $617 more than a conventional loan. About a third of that higher interest payment comes back to the TIC owner as a tax deduction, so the real difference is $407 per month. But since the TIC homeowner paid $100,000 less at purchase, he/she is actually ahead of the game for 20 years. /RH

Posted by Richard Hurlburt on Feb. 13, 2013 @ 12:11 pm

RH, so your point is that those who take risks, commit capital

and work hard might occasionally see some profit?

Gee, who'd have thought it?

Posted by anon on Feb. 13, 2013 @ 12:42 pm

Wouldn't it be more worthwhile

Wouldn't it be more worthwhile to go after airbnb and vrbo units which not only remove rent controlled units from the market, but allow landlords to rent for a week what they would get in rent for a month, without the hotel tax?

Attacking the middle class San Franciscan tic owners is not the way to maintain or build a livable city.

Posted by Guest on Feb. 11, 2013 @ 1:41 pm

BnB is a lifesaver for mom'n'pop landlords whose retirement

plan has been hijacked by self-serving political pimps.

I switched my rentals ober to short-term a couple of years ago because the argument is compelling. And it does SF good too, encouraging foreign academics, business people and tourists, rather than the "usual suspect" ne'er-do-well who thinks he or she deserves to live in SF just because they want to.

Posted by anon on Feb. 11, 2013 @ 1:59 pm

Nobody is attacking TIC owners

Many of us just feel that they should honor their original agreements and be grateful to own an affordable home in the city. They are not entitled to the windfall profits of condo conversions, which reduce the affordability of the unit in perpetuity.
If TIC owners feel this makes them victims, they simply have a victim mentality and refuse to accept responsibility for their choices.

Posted by Guest on Feb. 24, 2013 @ 11:44 pm

So renters who get evicted should not whine as well?

They should instead honor their original agreement, which was made knowing that they could be Ellis'ed?

I am glad you think the Ellis law should not be changed. We agree.

Posted by Guest on Feb. 25, 2013 @ 8:20 am

Adjustable vs. Fixed

All fractional loans are ultimately adjustable. If monetary easing leads to significant inflation, people with fractional loans will be screwed. This is not a substitution at any rate. My fractional loan is at 7.25% whereas a conventional loan is likely closer to 3.something%. I've lived in my unit for 18 years--most of it as a renter, but would appreciate some support to make my living situation more affordable and sustainable sooner than later.

Posted by Guest on Feb. 11, 2013 @ 1:47 pm

True. I just refi-ed at 3.25% for 30 years while the rate for

fractional loans is 4% to 5%, and with more risk.

We can save thousands of SF'ers from this risk and hassle without harming anyone, while garnering substantial revenues for the city. Nobody loses and we must do this.

Posted by anon on Feb. 11, 2013 @ 2:01 pm

Those that are not affected

I'm just going to tell my story again. I am an owner in a three unit TIC building. Everyone of us in the building is paying 2-3% higher interest (on fractional loans) on a 7/1 arm. We are not landlords, we are not investors. We are San Francisco working class people. We are looking for this law to pass so that we can pay what everyone else is paying.

Some of you will say "but you paid less for your unit". To this I say, "it depends when you bought it". If you bought it 5 years ago then you paid a lot for for your unit as well as being stuck with higher interest rate. People who bought condos five years ago are able to refinance to 3.5% while we are still stuck over 7%.

This "lawyer" said "So I don’t really see a hardship on the part of TIC owners who generally have smaller mortgages because they paid less for their units to start with." I'm sorry but wouldn't you like to help middle class homeowners save some money? Who are you helping by not reducing our interest rate? The banks. It seems to me that the only people who wouldn't want this measure to pass are banks and other people who make money off TIC's and high interest rates. Maybe like a TIC lawyer.

Posted by Guest on Feb. 11, 2013 @ 2:11 pm

I am one of the first time

I am one of the first time homeowners who will lose everything if this law doesn't pass. We are real people and we are suffering. Pass this legislation now!

Posted by Guest on Feb. 11, 2013 @ 2:12 pm

Ah, but SFBG doresn't care about real people, like the

nurse and school teacher I know who are TIC owners strugging with this.

They only care about ideology. After all, Tim already has his SFH in Bernal Heights, and Bruce made millions from selling to RE speculators.

Posted by Guest on Feb. 11, 2013 @ 2:33 pm

Well I thought I'd bring some

Well I thought I'd bring some style and polish to this septic forum.

Thanks for posting that. Scanning these right-wing conservative comments, they are as expected. But one doesn't even have to read the comments because one already knows what they say because they say the same thing any time they post from their hospital ward room with lap top at their side. They are either entirely homeowners or pretending to be one as elitists.

One homeowner wrote:

"I am one of the first time homeowners who will lose everything if this law doesn't pass. We are real people and we are suffering. Pass this legislation now!"

Who forced you to buy your old, moldy home? Why did you feel you had to have a home versus being a renter? You could be a tenant, you know. And tenants are "real people" and "suffering." Just look outside your myopic world a bit.

DON'T pass this legislation now!

Thanks.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 11, 2013 @ 3:28 pm

At least that poster took a risk and bought a home.

What risk did you ever take?

Posted by Guest on Feb. 11, 2013 @ 3:34 pm

"At least that poster took a

"At least that poster took a risk and bought a home."

And that's supposed to mean something intelligent? Yeah, there are a lot of stupid people out there making very bad decisions often based purely on emotion versus good analytical, realistic thinking. Are you not aware of the number of homes underwater, pleb?

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 11, 2013 @ 4:07 pm

All you did was sit on your ass in your shitty rent-controlled

hovel and whine about everything. Why should the voters reward a loser like that while punishing someone who took a risk to better themselves?

No reason at all.

Posted by Guest on Feb. 11, 2013 @ 5:10 pm

Temper, temper. Very typical

Temper, temper. Very typical of an amateur troll. You must try harder, pleb.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 11, 2013 @ 5:35 pm

No denial then, huh?

Very telling.

Posted by Guest on Feb. 11, 2013 @ 5:44 pm

Pass the legislation NOW

Wow, you are clearly a sick person who hates everybody who has accomplished something in his/her life. You hate homeowners because they've saved money to buy a property to raise their families in. You could not do that and that's why you judge us. That's not fair. Please stay out of this conversation unless you have something intelligent to say.

Pass the Legislation NOW!

Posted by Guest on Feb. 11, 2013 @ 3:49 pm

Yes, agreed, this is the politics of envy, writ large.

Those who cannot be bothered advance political theories predicated on advancing the interests of those who never work hard or take a risk.

Posted by Guest on Feb. 11, 2013 @ 3:58 pm

Changing the rules is unfair.

Although they portray themselves as victims, TIC owners purchased those properties under a set of rules that have not changed. No victimhood there.

By changing the condo conversion lottery system, these so-called victims will be reaping the benefits in the form of windfall profits.

They also claim that no one will be hurt by this rule change. That statement is false. Once the lottery is scrapped the first time, the real estate industry will have a greater incentive to convert rental units into TICs in anticipation of the next lottery bypass, which they will inevitably seek in a few years time. And the next generation of TIC owners will argue that the city allowed TIC owners to bypass the lottery in 2013, so it must allow them the same entitlement in 2015 or 2017 or whenever.

The ultimate result will be more evictions and chump-change buyouts of tenants in rent controlled apartments. In short, a reduction of rent controlled apartments that remain affordable to lower income San Franciscans.

Posted by Eddie on Feb. 11, 2013 @ 4:07 pm

We're not victims

Eddie, as a TIC owner I don't consider myself a victim. I worked hard, saved and bought a condo. I knew what I was getting into and did the math. I don't think any TIC owner considers themselves a victim. That being said, there is now an opportunity to help TIC owners so why not give them that help. As for any benefits reaped, so what? So what if something good happens for me and my family without hurting anyone else?

It's sad to see so many people opposed to this change because they are not getting anything out of it. Is your jealousy stronger than your compassion?

As for rental units converting to TICs? (You can't just convert to a TIC do you know what a TIC is?). Also as a TIC you have to be owner occupied for three years before you can be in the lottery. Added to that you can't have a single eviction from your building or you can never convert (which takes away your eviction argument). Added to that, why would a rental unit convert to a TIC just to convert back to a condo and have to give the renters in that condo lifetime guaranteed rent control? Your argument is off as are most of the arguments against this bill passing.

Really the only argument I see you making is that you aren't getting anything from this.

Posted by Guest on Feb. 11, 2013 @ 4:57 pm

Agreed. Ignore Eddie - he's just a bitter loser who never took a

risk and is not trapped in his rent-controlled shothole at an age that would embarrass most of us. Of course he doesn't want you to prosper or flourish, because he hasn't got what you have, and resents it. The politics of envy is written all over him.

I wish you luck with your path to condo conversion and residential security. People like Eddie are on a one-way ticket to nowhere, victims of their pwn passivity and negativism.

Posted by Guest on Feb. 11, 2013 @ 5:12 pm

Guest, nice unfounded personal attack.

Our rent-controlled apartment is quite nice, thank you very much.

I want to take Becky Bayside's advice and not fall into insults, so I won't.

You must be English, because the phrase " politics of envy" is very popular there with the upper classes.

Posted by Eddie on Feb. 11, 2013 @ 5:31 pm

You ask for ridicule with your endless attacks on those who

take risks and try and buy real estate for themselves rather than wallow in the more of a subsidized shack with no prospects of ever getting on the housing ladder.

The word "envy" was chosen very carefully because I can think of no other reason why you would not want this sincere correspondent to have the opportunity to upgrade her unit to a condo. It seems bitter, nasty and wholely without merit to deny her that when it harms nobody.

Why so miserable, day-in, day-out?

Posted by Guest on Feb. 11, 2013 @ 5:42 pm

My reasoning is clearly delineated

in my comments. These reasons have nothing to do with envy, bitterness, misery, or risk aversion. You have a projection problem, which may underlie a more serious illness. Get some help. Your health insurance probably covers it.

Posted by Eddie on Feb. 11, 2013 @ 5:50 pm

Your hatred of those who have bought TIC's comes across as

borderline psychotic and paranoid. You are not affected at all by them, so why should we care what you think?

Posted by Guest on Feb. 11, 2013 @ 5:58 pm

"so why should we care what

"so why should we care what you think?"

Are you more than one person? (with your "we"). I'd like to see that...someone who is more than one person. Do you have two heads?

You demonstrate that you do care what he thinks by continuing to respond to him, pleb. If you didn't care what he thought you'd ignore him.

This place is just saturated with imposter trolls. It makes it so much harder for those of us who really are.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 11, 2013 @ 6:11 pm

Well, at least you admit you're a troll.

QED.

Posted by Guest on Feb. 11, 2013 @ 6:21 pm

I've never written a comment

that expresses hatred towards TIC owners. I oppose the changing of the condo conversion rules to give greater incentives to convert rent-controlled apartments to TICs.

You are a hateful person with disdain for anyone that differs from you or doesn't share your values and ideology. In other words, intolerant.

I support rent control. San Francisco has rent control. Tenants aren't asking for a rule change to benefit them at the expense of others. The Real Estate industry and the TIC owners it hides behind are.

Problem?

Posted by Eddie on Feb. 11, 2013 @ 8:28 pm

but Eddie...

Correct me if I am wrong, but you are saying that TIC owners are asking for a rule change to benefit them at the expense of others, and that this is wrong and that it should not be done.

But didn't tenants ask for a rule change (rent control) to benefit themselves at the expense of others (landlords) when they pushed for, and got, rent control in place?

Why were the rule changes ok for tenants, but now when middle class TIC owners seek a little relief, they shouldn't get help? The majority of these people, so far as I know, aren't land speculators or stuff like that, but people who are trying to simply own their own home in SF. The effect that rent control had on landlords was concrete and immediate, while your concern that in the future some potential additional rule changes may result in more rental properties disappearing is speculative (not to mention partially offset by the $ the TIC conversions will steer towards new housing).

Posted by guestD on Feb. 12, 2013 @ 8:56 am

This is 2013, not 1979.

I stand by my comments about the effect the condo conversion lottery bypass will have on the rate of conversion of rent-controlled apartments into TICs. Anything that might happen in the future is speculative including whether the money from the condo conversion fees will actually produce the promised BMR housing.

Once rent-controlled apartments are gone, they are gone forever. That much is not speculation.

Posted by Eddie on Feb. 12, 2013 @ 9:20 am

Eddie, there will be zero effect on existing RC units if some

current TIC's are allowed to go condo because they are already owner-occupied, and it is a one-time thing, so nobody can rely on a repeat.

Posted by Guest on Feb. 12, 2013 @ 9:48 am

You're wrong

The impact is on future tenants who will live there without any protection from rent increases. The current owners/converters will move out one day, and then the unit becomes a home for hundreds of potential future households, including tenant families.

The Wiener legislation is about future use, not current use. The TIC owners are currently living in these buildings just fine, even if the mortgage expense may be a little higher. But they paid a much lower cost than a comparable condo and they pay lower property taxes than the comparable condo, so that more than makes up any higher interest cost. And the interest cost is reduced every year anyway as the loan gets paid off.

Keeping the units as TICs is what is important so that the units remain subject to rent control if and when they are rented out again.

The legislation that should be before the board would prohibit ANY future condo conversions of a rent-controlled apartment, but that would assume the mayor and board were serious about protecting current and future San Francisco tenants.

Posted by Guest on Feb. 12, 2013 @ 11:46 am

Banning all condo's from SF is a non-starter

Most of the new build is condo's. If you ban those, there would be very little new build in SF, and that would increase rents as the people who would have bought them chase down buildings in the Mission that haven't been Ellis'ed yet.

The vast majority of people want to live in their own condo or TIC, and not rent them out. Being a landlord in this town is only for the thick-skinned.

Posted by Guest on Feb. 12, 2013 @ 12:01 pm

Eddie, the proposed one-time TIC change does not affect you

in any way, so why oppose it. That is like a straight person opposing gay marriage even tho it doesn't affect them.

Posted by Guest on Feb. 12, 2013 @ 9:11 am

That's a weak analogy.

I have expressed the reasons for my opposition to the condo conversion lottery bypass.

Anything that weakens rent control, even indirectly, affects all tenants in rent-controlled apartments. In fact, you and your friends consistently express your desire to end rent control. This proposed change is part of your strategy to accomplish that goal.

By the way, I am a straight person who supports gay marriage, a white person that supports civil rights, a native born American who supports the rights of immigrants. I'm no hero, but some people can look beyond their immediate tribal affiliations.

Posted by Eddie on Feb. 12, 2013 @ 9:26 am

The reactionaries *hate* that sort of thinking.

The ability to look beyond your immediate tribal affiliations means that appeals to tribalism are ineffective for manipulating you.

E pluribus unum isn't at all Randian.

Posted by lillipublicans on Feb. 12, 2013 @ 9:40 am