November, 2005 -- This past Fall, the San Francisco TIC Coalition participated in San Francisco’s Ellis Working Group task force. The task force was formed by Mayor Gavin Newsom and Aron Peskin, President of the San Francisco Board of Supervisors, to explore strategies that promote home ownership while discouraging Ellis Act and other unwanted evictions.

The Task force was comprised of pro-homeownership groups such as Plan C, the SF TIC Coalition, the Coalition for Better Housing, San Francisco Apartment Association and the San Francisco Realtors Association. Tenants rights advocates were also represented including the San Francisco Tennant Union, the Aids Housing Alliance, the Housing Rights Committee, and the Tenderloin Housing Clinic.

After six weeks of discussions, the pro-homeownership and tenants rights groups could not reach an agreement and the Working Group was disbanded. How did this happen? Politics as usual.

It’s clear that TICs pose a threat to the tenants groups' grip on City Hall. Currently, 30 percent of San Franciscans own a home --- well below the national average of 68% for other major metropolitan cities. Through increased homeownership opportunities, former renters are increasingly becoming homeowners and the 70:30 split of renters to homeowners is starting to shift in the pro-homeownership direction. These new homeowners are the backbone and soul of the city, raise families, contribute to bettering our neighborhoods, and -- most importantly -- serve as a strong tax base.

TICs have contributed to this shift because they've proved to be affordable and safe for first time homeowners. In addition, TIC formations have been adjudicated to be a legal form of homeownership and protected by state law (and cannot be changed by the San Francisco Board of Supervisors since state law trumps local law). While the TIC Coalition does not advocate unnecessary or protected-class evictions, it’s a fact of life that evictions are being driven by market demand to create first-time homeownership opportunities for San Franciscans.

During the Working Group sessions, it became very clear that the renter groups wanted to change the Ellis Act to regulate TIC formation locally in San Francisco. This proposal was rejected from the pro-homeownership groups. Giving the Board of Supervisors the opportunity to regulate TIC formation could quell first time homeownership opportunities through additional restrictions or a complete ban on TIC formations. Today, the Board does not have the power to override state law and restrict TIC formations. The homeownership groups advocated increasing homeownership opportunities by increasing the condo-cap – which the tenant groups rejected since we didn’t agree to change the Ellis Act.

So, the Working Group ended at an impasse. From the SF TIC Coalition’s perspective, the City needs to take a practical approach to balancing homeownership and renter requirements. The Chris Daly’s of the world are intent on closing every perceived loophole and even banning all condo conversions. Even if these drastic measures pass, the evictions will continue and people will still continue to buy TICs.

Why? People -- especially renters -- want to desperately own a home in San Francisco. TICs have been proven to be an affordable, safe, and entry-level housing product that earns equity and can be easily resold. Finally, with the promise of individual TIC loans on the horizon, TICs will pose less of a financial risk.

If condo-conversions are banned, nothing will change. TICs will be the defacto entry-level home in San Francisco: Evictions will continue, TICs will be purchased by first-time homeowners, equity will be built, and homeowners will easily resell their TICs to purchase a larger home. And, in this scenario, the Board of Supervisors is rendered powerless since they cannot tamper with State law – a horrifying prospect for the tenant groups.

The Board cannot legislate against market forces and impede the hunger for first-time housing through a patchwork of anti-homeownership legislation. Instead of fighting a battle against the market, why not implement ways of making it easier for renters to own in San Francisco?

During the Ellis Working Group, proposals were discussed that created opportunities for renters to become homeowners. These proposals were quickly rejected by the tenant groups, demonstrating that they do not represent the aspirations of all renters in San Francisco.

So, as the free-market forces continue to change the 70/30 split, shouldn’t the Board of Supervisors be doing everything in its power to encourage and create opportunities for all renters to get a piece of the American Dream?

Randy Brasche
President, San Francisco TIC Coalition