Feature
by Supervisor Tony Hall
Earlier this year I introduced a legislative package to the Board of Supervisors entitled the Home Ownership Program for Everyone (HOPE). Subsequently, a citizen’s group called “Renters for Homeownership” began circulating a petition with the goal of placing HOPE on the November, 2002, ballot. I would like to take this opportunity to explain the merits of the HOPE proposal and to ask you to support it. That support is vital for the proposal’s success at the Board of Supervisors and on the ballot this Fall.
Briefly, this is how HOPE works: If a building owner and a pre-set percentage of tenants voluntarily agree, the property owner would offer to sell individual units to the current tenants, who would be able to buy their apartments as condominiums. Tenants who do not wish to buy, or who are unable to purchase their units, would be granted leases providing them with the same protections they currently enjoy under the Rent Ordinance. HOPE is completely voluntary for landlords, as well as tenants, and both have to agree on the price.
The HOPE proposal provides a win-win situation for tenants and property owners that cannot be matched. It offers to tenants not only a genuine opportunity for affordable homeownership, but also an opportunity to accumulate equity and join the middle class. At the same time, apartment owners get a chance to subdivide their building and thereby add value to their assets.
Under HOPE, tenants will have the option of exchanging the security of a rent-controlled apartment for the far superior security of homeownership. As such, HOPE would eventually change the voter demographic by replacing current renters with homeowners. For obvious reasons, this would have far-reaching effects on the electoral landscape of San Francisco.
Research has repeatedly shown that homeownership is the most important priority for tenants. This is true in San Francisco for 350,000 tenants in 220,000 households. San Francisco has a 34 percent homeownership rate, compared to 72 percent in Phoenix, 68 percent in Atlanta, 59 percent in San Diego, and 63 percent in Seattle. Nationwide, the homeownership rate is 68 percent. San Francisco has by far the lowest homeownership rate for a city of its size in the whole country.
Immigrants, minorities and those who have not yet climbed the economic ladder, are especially hurt by the City’s restrictive subdivision laws, which make homeownership difficult, if not impossible, for lower- and middle-income working families. According to the Department of Housing and Urban Development, homeownership is the main way for people to accumulate wealth. Homeowner households have average household wealth that is 34 times that of the average tenant household, and the principal source of that wealth is homeownership equity.
No evictions would be caused by HOPE subdivisions, as non-buying tenants would get legal and enforceable leases. Similar programs have been successful for many years in New York, Washington, DC, and other cities. Why not in San Francisco?
HOPE is eminently workable for tenants, since they will be able to take advantage of affordable, low-down payment mortgage financing offered for condominiums by various government agencies and private institutions. Since the value of an apartment as a rental unit is so much less than its value as a condominium, the renter could buy it, under HOPE, at a greatly discounted price from its condo value, which would still be much greater than its value as a rental unit. (The average price of all 5,685 rental units sold in San Francisco between January 2000 and April 2001 was $156,000). Even if the average sale price for each HOPE unit is just $ 225,000 (i.e., about half the median price of a San Francisco condominium) both landlord and tenants would benefit, and would have good reason to cooperate for mutual gain.
There are many affordable mortgage programs made available by the Federal Housing Administration, the Federal National Mortgage Association (FNMA), and other agencies, as part of the federal government’s commitment to increase homeownership. For example, in the Bay Area, CitiMortgage and FNMA have committed to $2.1 billion in affordable mortgage loans. They have introduced flexible mortgage products (like reverse mortgages for seniors) that address the unique needs of low- and moderate-income borrowers, new immigrants, and other under-served populations. Other major lending institutions have made similar commitments.
As a result of HOPE, the City would get an increased tax base and higher property tax revenue without having to increase tax rates, and would also empower citizens by giving them a much greater stake in their community. We would be more likely to have better schools and cleaner and safer streets. Middle-income working families and other members of the aspiring middle class are now forced to leave the City to find homes they can afford to own. HOPE will change that.
I strongly encourage you to find out more about the HOPE program. Please help with the outreach effort by informing all your tenants and other property owners about this exciting win-win program. Encourage everyone to get involved with the grassroots effort to collect signatures to put it on the ballot, and then, in November, help get voters to the polls to vote for HOPE and put homeownership within reach of thousands of San Franciscans! We cannot do it without your active support and involvement!
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Supervisor Tony Hall represents San Francisco’s District 7 (West of Twin Peaks). He may be reached at 415-554-6516. © Copyright 2002.