Feature
by Barbara Herzig
On November 16, 2004, the San Francisco Board of Supervisors passed
a law, sponsored by Supervisor Daly, which places additional restrictions
on condominium conversions. Daly initially tried to ramrod legislation
through the board that would have eliminated a longstanding exemption
from the condominium conversion lottery for certain two-unit owner-occupied
buildings. Through the efforts of the San Francisco Apartment Association
and other industry and neighborhood groups, these amendments to the
condominium law were held to a bare minimum.
The Daly amendments that survived create a disfavored group of buildings
for purposes of the Subdivision Code—buildings in which there
has been, at any time after November 16, 2004, an eviction of a senior,
disabled or catastrophically ill person for owner-move-in (OMI),
Ellis Act, or any of the other just causes for eviction enumerated
in Sections 37.9(a)(8) through (14) of the Rent Ordinance. Evictions
based on nonpayment of rent, nuisance and other just causes based
on the tenant’s behavior are not within the disfavored class.
The Daly
amendments resulted in a couple of changes to the Subdivision Code. First,
if a two-unit owner-occupied building falls within the disfavored class,
it no longer qualifies for the exemption from the conversion lottery.
Note that to qualify for the exemption, both units must be occupied
by owners of record; two-unit buildings where tenants occupy one
of the units and two-unit buildings where both units are used by
a married couple have never qualified for the exemption.
Second, under the San Francisco Subdivision Code, only 200 units per year
can be converted to condominiums through the lottery process. Buildings that
are permitted to file subdivision applications are selected by lottery. Under
the Daly amendments, the first 175 units must be selected from buildings
that do not fall within the disfavored class. Buildings that fall within
the disfavored class may compete for the remaining 25 slots, along with all
other units that were not lucky enough to be selected among the first 175.
Given that approximately 1,600 units competed for 200 slots in 2004, and
the number increases each year, the odds of winning any of the remaining
25 slots is very small.
The way the Daly legislation defines who qualifies as a disabled tenant may create problems in the case of an OMI or Ellis Act eviction in a building. The Subdivision Code definition refers to the Americans with Disabilities Act, which defines disability as “a physical or mental impairment that substantially limits one or more of the major life activities of the individual.” Unlike the Rent Ordinance that uses an objective standard to determine disability, whether a person is disabled for the purposes of the Subdivision Code is a question of fact. Whenever there is a question of fact, the tenant attorney bar is not far behind, challenging an owner’s rights and seeking settlement money. Another problem with the definition of disability in the Daly amendments is that again, unlike the Rent Ordinance, a minimum-occupancy period is not required for a tenant to fall within the disabled category.
The term catastrophically ill is defined as meaning a disabled person who has lived in the unit for five years; but the definition became unnecessary when the legislation was amended to incorporate the ADA definition of disabled and the minimum-occupancy period was eliminated. Senior has the same definition as in the Rent Ordinance—a person who is 60 years old and has resided in the building for 10 years as of the date of the lottery.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Barbara Herzig is an attorney who has specialized in subdivision law, including San Francisco condominium conversions, since 1979. Over the years, she has been an advisor to SFAA and other industry groups on condominium conversions, and has drafted several industry-sponsored proposals attempting to expand condominium ownership in San Francisco. Copyright © 2005 by the San Francisco Apartment Magazine. All rights reserved.