They are two of the faces of this city's housing
Cindy Zhao, 48, works two jobs to keep her dream of home ownership afloat. Like thousands here, she bought a flat in a tenancy-in-common -- a share of a four-unit building that has left her family financially entangled with co-owners.
The interest rate on their collective mortgage is more than double those available for solo loans, and if one fails to make a payment they all could face foreclosure. For years she and her husband have entered a lottery that allows 200 such units to be converted annually to condominiums. The tenants in the four-unit building all enter the lottery.
Then there's Ana Gutierrez. For more than three decades, the 67-year-old mother of five has lived in a rent-controlled Mission District duplex. But her property is in demand in today's tech-driven economic boom.
In November, the landlord notified Gutierrez and her neighbors that they will be evicted under the Ellis Act, which allows building owners to get out of the rental game. There's a good chance the building will be resold as a tenancy-in-common.
In an attempt to help homeowners like Zhao, two San Francisco supervisors last year proposed legislation to allow about 2,200 TIC units on the waiting list to be converted to condos. In exchange, each would contribute a hefty sum -- $20,000 -- that would go toward new affordable housing development.
It seemed like a win-win proposition. But nothing is simple when it comes to San Francisco's housing politics.
Convinced that loosening the condo conversion rules would spur the creation of more TICs and further displacement of tenants from the city's dwindling rent-controlled housing stock, tenant advocates fought back and won.
Condo conversions can be regulated by the city, but there's no legal mechanism for challenging the creation of TICs. Tenants rights advocates believe that if condo conversions are limited, TICs may become less popular.
Amended legislation approved by the Board of Supervisors last week calls for a 10-year moratorium on all conversions after the one-time flood, lifetime leases for any tenants in buildings that do become condos and limits on who can convert when the lottery resumes.
Although the law gives Zhao and other tenancy-in-common owners a chance to buy their way to condo conversion, the process largely would be frozen in the likely event of a legal challenge, leaving many owners in limbo.
In a city where nearly two-thirds of residents rent, the median market rate for a one-bedroom apartment is $2,700 a month -- prohibitive for many low- and middle-income families. Tenancy-in-common units, which are more affordable than condos or single-family homes -- are out of range for many, and tenant advocates maintain that each new unit detracts from the rental stock.
"I don't think we've solved the problem as a whole, but what we've done is send a very strong message to the real estate industry that this is still a tenant city," Sara Shortt, executive director of the Housing Rights Committee of San Francisco, said after Tuesday's vote.
But Supervisor Mark Farrell, who led the effort to help struggling TIC owners, called the compromise a "mess."
"We talk about keeping families in San Francisco. We might have a difference in opinion of how to do that. But killing home-ownership opportunities, to me, is ridiculous," he said.
The battle marks another front in a long war over housing in this dense, affluent city.
Although tenancies-in-common exist elsewhere, San Francisco's housing scarcity has made them much more prevalent here, said Lyssa Paul, an attorney who advises those who own the units. During the last tech boom, "they sort of exploded."
At first, only group mortgages were available. But some lenders now provide fractional loans so that one default doesn't pull other owners down. Rates on those also are relatively high, and the longest fixed-term available is seven years. Since the loans can't be pooled and sold to investors, few banks offer them.
Despite the restrictions, for many middle-income residents, "there is, quite frankly, no ability in this city to get into properties without TICs," Paul said.
Zhao and her husband chose their Richmond District unit in search of a good school for their son. They are not "greedy developers" -- the enemy invoked by tenants-rights advocates. But most TICs once housed tenants in rent-controlled units. Some left on their own; some received buyouts; some were evicted.
Legislation in 2006 sought to address an eviction surge by banning condo conversions of any building where an elderly or disabled person had been booted under the Ellis Act -- and blocking conversion for a decade if two or more evictions of any tenants had occurred.
Yet the number of tenancy-in-common units continued to rise, and the waiting list for condo conversions grew.
Ellis Act evictions have increased again during the current tech boom.
Since Gutierrez is considered elderly under housing laws, her building would be banned from condo conversion. But it could still become a TIC, and she would still lose her home of 34 years.
"The stress we are going through is massive," she told supervisors at a recent hearing, bursting into tears. "Finding affordable housing in this city is almost impossible. We need protection."
Whether the new rules will help solve the city's underlying crisis remains an open question.
"I think the power of home ownership is so strong that there will be more TICs no matter what," Paul Utrecht, an attorney with the Small Property Owners of San Francisco Institute, told supervisors. "The board is very much like King Canute, telling the waves to stop. The waves are not going to stop."
But tenant advocates say a decade-long ban on condo conversions should cool the housing market while they press for new affordable units that won't displace anyone. Meanwhile, they hope tenancies-in-common will fade away.
"I don't think there's any question that this is an inferior class of ownership and they need to be taken out of the situation," said Mitchell Omerberg of the San Francisco Affordable Housing Alliance.
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