|
|
|
V vs. Z: The Battle Over Condo Conversion
|
|
Alex Gronke
|
|
November, 23 2006
|
|
|
|
|
| Love them or hate them, you can't say that Oakland Native, aka Johnny Z, and V Smoothe, don't love Oakland. The founders of futureoakland.com spend more time than your average 27-year-olds talking and writing about the direction Oakland - especially downtown Oakland, or the DTO in Johnny Z's coinage - should take. But V and Z are not your garden variety, single-issue gadflys. V is a classical scholar who reads ancient Greek and Aramaic. Z knows an awful lot about fashion. Both are deejays, who share a fondness for an obscure sub-genre of late 1970's, post-disco Italian club music. Between spinning at night and pursuing their other interests by day, the duo recently had an online debate about an issue city officials will be discussing next week. It's V versus Z on condo conversion. |
| 
| V vs. Z
| The Battle Begins....
|
Love them or hate them, you can't say that Oakland Native, aka Johnny Z, and V Smoothe, don't love Oakland. The founders of futureoakland.com spend more time than your average 27-year-olds talking and writing about the direction Oakland - especially downtown Oakland, or the DTO in Johnny Z's coinage - should take. But V and Z are not your garden variety, single-issue gadflys. V is a classical scholar who reads ancient Greek and Aramaic. Z knows an awful lot about fashion. Both are deejays, who share a fondness for an obscure sub-genre of late 1970's, post-disco Italian club music. Between spinning at night and pursuing their other interests by day, the duo recently had an online debate about an issue city officials will be discussing next week.
It's V versus Z on condo conversion.
Looking to increase Oakland's shamefully low homeownership rate, which for the last decade has been stuck at around 40 percent compared to a statewide average of 57 percent, three members of Oakland City Council are proposing a change to a 1981 law permitting condo conversions. Advanced by Ignacio de la Fuente, Desley Brooks, and Henry Chang, the plan would limit the number of rental units allowed to become condos in Oakland to 800 a year. The proposal's backers say the program will make homeowners of 15,000 families over 10 years, and possibly add $20 million a year to the city's affordable housing fund. Critics charge that the scheme would strip the city of scarce rental housing while displacing current tenants. Moreover, claim the naysayers, the new condos will be out of the price for all but 20 percent of Oakland's renters. V's and Z's debate is long. But it concludes with some compromises that an impatient reader can skip to.
V: This condo conversion plan is a disaster! It must be stopped!
Z: What? They're relaxing condo conversion limits for a small fee (like $16k per bedroom). What's wrong with it?
V: The problem is that we already have a terrible rental housing shortage in Oakland and this will make it even worse!
Z: OMG, relax. While we have a rental housing shortage, we also have a shortage of low-end condos, which this would provide. The solution to the rental housing shortage is to build more rental housing, not to block condo conversions. Do you want to be like San Francisco, where Tenants-In-Common have to wait years to condoize their buildings?
V: Nobody builds rental housing! This will exacerbate this rental housing shortage.
Z: Well, Forest City is dropping 665 market-rate rental units on the market next year (maybe 2008), and is looking to build a second phase. The latest JLS building is apartments, not condos. Ignacio is right that Oakland has a below-average homeownership rate; condo conversion of older apartment buildings will be the only way a lot of people can afford to own their own home. In addition, the money generated all goes to homeownership assistance and section 8.
V: We have a low home ownership rate because of the huge percentage of our city that is immigrants and poor. They can't afford to own homes no matter what the discount.
My problem isn't people getting evicted anyway - it's the overall rental housing shortage that this is going to exacerbate. It's a very serious problem. If this passes, apartments are going to just keep disappearing, rents will skyrocket, and people like me and K. are not going to be able to afford to live here anymore.
Z: You really think so? Currently, the apartment housing stock is fixed - apartments can't be converted to condos without a new development replacing the rental units. That seems like over-regulation. In SF, one of the very few ways middle-class people are buying homes is to buy apartment buildings as TICs, but the limits are really strict and unfair. I understand that Oakland will never have a homeownership rate at the state average, but trying to raise it from 40 percent to 50 percent sounds reasonable.
I definitely agree that there is a rental housing shortage, but when I think of examples, it's not TICs that are causing this. In Rockridge, it was people converting apartment buildings to single-family homes, not multi-family condos, that squeezed the neighborhood (such conversions are not subject to limitation by local governments). There have been a few large condo conversions of apartments downtown, yet we still have a liquid and affordable supply of rental housing. If rents go up, developers will build more apartments, right? I'd like to think that working-class renters and working-class wannabe homeowners (at whom this is really aimed) aren't in competition.
This may not fly, but maybe the city should consider offering for-rent developers, especially of smaller apartment buildings, a break from some planning processes if they promise not to convert to condos.
V: Hell, I've said repeatedly that I think the city should subsidize rental developments if that's what it takes to get them built. Rental housing is really important to a city's vibrancy.
Of course, I want people to be able to own homes here eventually, but its really important to make housing available in the city at ALL levels. This needs to be a place where young people and immigrants can move TO and start out just as much as it needs to be a place where they can buy a home and settle.
Z: I completely agree that we need tons of rental housing. But because of high construction costs, newly-built condos, while below the median price of a home in Oakland, will never be cheap at market rates. The problem with inclusionary zoning isn't the idea that we need to build cheaper condos, but that the benefits of homeownership aren't given to people in the below-market homes because of the permanent affordability clause, that it's incredibly inefficient, that the wrong people are paying for the subsidized housing (first-time home-buyers rather than existing homeowners), and that it has unintended consequences (chiefly, significantly diminishing the number of condos that get built). What this plan does is allow already-constructed buildings to go condo, opening up cheap condos to the market. That's a good thing!
You're assuming that the supply of housing is fixed! Perhaps rather than linking this to inclusionary zoning, as Brunner stupidly suggests, it's linked to incentives for the development of rentals.
Here are some possible compromises:
Limit the measure to certain areas where rental housing predominates (like East Oakland and Adams Point, but not North Oakland or downtown or West Oakland). Attach the measure to an easing of development restrictions on small apartment buildings. Require that a at least half of the apartment tenants agree to the conversion. Shove apartments down Jane Brunner's district's throat.
V: The supply of housing is fixed -- if nobody builds any!
What development restrictions on small apartment buildings would you ease? How?
Z: I'm not as pessimistic as you are about people being able to buy the units. Remember, they'll be really, really cheap (and will not compete with new condos)! I think that Ignacio and Brooks really do represent their respective constituencies, and so if they're backing this, there's demand for it. Limiting the conversions to buildings where half of the tenants want to buy would ensure that, as would limiting the geographic scope of the ordinance.
PS, both B. and K. live in Grand Lake, where there's a large supply of for-sale housing already. Your argument about young people and immigrants assumes that Oakland is for them, and that they'll move to suburbs when they're older (to be replaced by more young people and immigrants). Maybe it's true, but it's also a specific vision of the city. Remember, Iggy represents immigrants, and he is really into this and other homeownership initiatives.
Your most persuasive argument, I think, is that the housing market is fixed / shrinking relative to demand, especially from a regional perspective. It's very frustrating that our neighbors' unwillingness to build housing limits Oakland's options. You would support the ordinance if there was a huge boom in rental housing construction, right? But there's really no way we can make that happen, even if we implement smart incentives, because of the regional shortage.
We could exempt construction of small apartment buildings (defined by overall size and construction type) from all but structural review, like in-law units are. These would have to be exempt from the new ordinance, though, at least for a long period of time.
Regarding the very poor, first, I believe that section 8 housing would not be part of this. Second, apartments full of the desperately poor won't be converted because nobody would buy the condos. Third, wouldn't the six months of rent as compensation be helpful? Fourth, the whole point of this, and other measures the city's been taking for the last decade, is to give poor people the tools they need to buy a home.
V: I'm not talking about the very poor. I'm talking about working class people.
6 months of rent compensation would help, I guess. But where are they going to move if there is no rental housing? To San Leandro? We want people to be able to live in Oakland.
I think that poor people should be given the tools they need to buy a home. But NOT at the cost of exacerbating an already serious rental housing shortage.
Z: LOL...
The V and Z Compromise:
Z: While both V. and I started the conversation from very different perspectives, we moved toward the center through listening to one another. The main point in favor of this ordinance is the fact that already-constructed buildings are far cheaper than newly-built condos because of construction costs. The main point against it is that there is a serious shortage of rental housing that would be exacerbated by this measure. We both support a few compromise measures:
First, the 1981 law should be modified to stop developers selling conversion rights from their condos to apartment buildings. Instead, the city should allocate the conversion rights in a targeted way, for example to the mid-range apartment buildings or TICs envisioned by the proposal.
Second, to make up for the loss of conversion funds for apartment developers, the city needs to create clear financial incentives for the development of rental housing. A one-year property-tax holiday should do the trick without an impact on the city's budget.
Third, development restrictions must be eased for rental apartments. Following the mold of in-law units, perhaps all low-rise apartment buildings of ten units or less be exempted from all but structural review.
Fourth, a new funding source for homeownership programs and Section 8 needs to be identified. "Inclusionary zoning" is a disastrous program that doesn't target these needs. Instead, a portion of the redevelopment tax increment could be used for this. Or perhaps a reasonable, rather than outrageous, condo tax (say, $20k per bedroom, rather than Brunner's $110k/bedroom fee).
What's important about this conversation is that, in the currently polarized world of Oakland politics, there is much room for compromise.
Write to Johnny Z at z@novometro.com. Write to V Smoothe at v@novometro.com |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECOMMEND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OAKLAND
REAL ESTATE
|
|
|
|
|
|
|
|
|
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|