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Battle Gears Up for Changes to Oakland Condo Law

By J. Douglas Allen-Taylor
Tuesday November 21, 2006

With Oakland’s proposed new condominium conversion law set for a return to the Oakland City Council’s Community and Economic Development Committee on Nov. 28, and then to the full council on Dec. 5, the issue is heating up among politicians and tenant groups in the city. 

On Saturday, tenant rights organizations and two members of City Council—Jean Quan and Nancy Nadel—rallied in downtown Oakland and then gathered signatures on anti-conversion-law-change petitions in various neighborhoods of the city. 

The tenant rights activists say they want the new conversion ordinance put on hold until a comprehensive review of the proposal can be completed, including its potential impact on current renters. 

The battle has pitted activists who wish to preserve the city’s existing rental housing stock against a City Council maverick—Desley Brooks—who would like to make it easier for existing renters in the city to convert to home ownership, and who has long argued that her East Oakland district has been a dumping ground for low-income rental units. 

“Many of the opponents of my proposal say that they would rather move forward with inclusionary zoning,” Brooks said, citing a proposed city ordinance that would require any new housing developments receiving city assistance to include a percentage of units within the price range of low and moderate income renters. “But condominium conversion can create low and moderate income housing opportunities faster than inclusionary zoning can.” 

Brooks said that the current effect of the loss of rental housing in Oakland is particularly devastating on the city’s African-American population. 

“At the rate that the proposed inclusionary zoning would move, many more black people would continue to be pushed out of Oakland,” she said. 

According to the staff report by City Administrator Deborah Edgerly, the purpose of the proposed amendments is “to increase [Oakland’s] home-ownership rate from 41 percent to at least 50 percent in 10 years while generating nearly $20 million for a new Affordable Housing Trust Fund.” 

The Trust Fund is proposed to be set up to assist low and moderate income renters. 

But in her staff report, Edgerly has also conceded that only around 10 percent of Oakland’s existing 90,000 renters have enough median income ($75,000) to meet the $375,000 projected price tag of most converted condominium units. 

Even with city subsidies to help renters purchase their condominiumized units, Edgerly said that there remains “a huge affordability gap” for most Oakland renters trying to purchase homes in rental units converted to condominiums. 

Opponents of the proposed law changes say that even if Brooks herself is sincere in trying to convert existing renters into home owners, the proposals are also being promoted by real estate developers who care little about renters, and only want to make a profit. 

In an online letter urging citizens to oppose the proposed changes, Councilmember Nancy Nadel wrote earlier this month, “Two years ago when Councilmember Brooks brought some real estate investors to meet with me proposing to change condo-conversion laws in my district, they claimed that tenants would not feel a difference and that their monthly mortgage payments would be the same as their monthly rent. When I asked for the actual numbers and compared them to my constituents’ rent, there was a huge difference, and that didn’t even cover the down payment requirements.” 

Nadel added that easing the way for low to moderate income citizens into home ownership by lowering the upfront costs “does not stabilize them or the neighborhood at all. In fact, it can lead them into a far worse situation with no money for first and last months’ rent if they lose their newly purchased condo.” 

Oakland’s original condominium conversion law was passed by council in 1981, with a number of amendments added in the years immediately afterwards. 

In 2002, Councilmember Brooks said she became interested in modifying the ordinance after a constituent came to her with the idea of increasing home ownership in her East Oakland district. 

“Before that,” Brooks said, “I didn’t know a thing about condominium conversion.” 

But Brooks could generate no interest among other councilmembers in her proposed changes. In addition, her proposals generated intense community opposition. 

The dry language of the proposed new ordinance’s staff report reads that “in 2004, staff recommended changes to the Ordinance that were reviewed and considered by the Planning Commission. These changes did not move forward due to the high degree of public concern.” 

Brooks’ solitary battle changed late this year when Council President Ignacio De La Fuente and At-Large Councilmember Henry Chang signed on as co-sponsors, leading to the possibility that the proposals could receive enough Council votes either to pass outright, or to tie 4-4 and then receive approval through a tie-breaking vote by outgoing Oakland Mayor Jerry Brown. 




Key Changes to Oakland’s Existing Condo-Conversion Law 



Following are the key provisions of Oakland’s existing condo conversion law, along with the changes proposed to the law by Councilmembers Brooks, De La Fuente, and Chang. Provisions of the existing law are in bold type: 

1) 60-day notice to tenants by the owner prior to beginning the conversion filing process, including the right of tenants to attend and give testimony at a public hearing on the conversion;  

Existing law contained no penalty to the building owner for failure to notify the tenants. The proposed new law would include a penalty of six months rent on a new unit for every tenant who was not given proper notification of the intent to convert to condominiums. 

2) notice to tenants by the city of their rights under the law when their buildings are converted, as well as notice of any hearings or meetings to be held concerning the conversion;  

This provision is retained as-is in the proposed new law. 

3) the right for a tenant to continue occupying their dwelling for 180 days following the issuance of the conversion approval;  

Retained in the new law. 

4) if the tenant chooses to move, the right of the tenant to break any lease and move out with a minimum of 30 days notice without penalty;  

5) assistance by the owner for tenants to purchase their rental units under the conversion as well as to relocate in the event the tenants choose not to or are not able to purchase their rental units; 

Relocation assistance under the existing law is limited to $1,000—a maximum of $500 for actual moving expenses and another $500 for renting a new home. That amount is increased to $3,000 in the proposed amendments—a maximum of $1,000 for actual moving expenses, as well as a maximum of $2,000 for rent of a new home. In addition, while tenants can only get reimbursed for the first month’s rent of a new home (to a maximum of $500) if they choose to relocate, the new ordinance would allow reimbursement for first and last month’s rent (to a maximum of $2,000). 

6) a right of lifetime lease and rental of any unit that contains a tenant 62 years or older, as well as the right to transfer those leasing rights to any other available unit in the dwelling to be converted (in other words, elderly tenants cannot be kicked out of the building due to condominium conversion); 

The proposed new ordinance retains the right of seniors to remain in their existing units as renters, but eliminates their right to move into any other available unit in the building. 

7) for every building converting five or more units, a comparable number of rental units must be added by the owner to Oakland’s housing supply so that condominium conversion does not decrease the amount of available rental housing; 

The proposed new ordinance keeps this one-to-one rental stock addition for every rental unit taken off the market through conversion, but also adds a second option. Instead of adding a new rental unit, the building owner could instead pay into a Housing Trust Fund set up by the city. The Housing Trust Fund money would then be used for “any housing assistance programs for very low to moderate income Oakland residents.” A criticism of this provision is that while it would provide assistance to renters who need it, it would not prevent the loss of rental units in the city due to condominium conversion. 

8) denial of conversion if it is proposed for a “conversion impact area” where the city’s rental housing stock has been depleted by previous conversions; 

The proposed new ordinance keeps this provision, but—as with the one-to-one rental unit addition—it adds the alternative of payment by the building owner into the Housing Trust Fund even if the proposed condominium conversion is in a “conversion impact area. 

In addition, the proposed new ordinance puts a cap of 800 rental unit conversions to condominiums per year (there is currently no cap on the number of possible conversions), and adds a 10 percent discount to the purchase price of condominium units for tenants currently renting that unit.