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Re: “Exclusive: Parliamentary Trick Could Kill Condo-Conversion in Oakland

Late Tuesday night, the Oakland City Council abandoned a controversial effort to force building owners to subsidize low-income housing and voted instead to appoint a Blue Ribbon Commission to study the housing problem. In one of the rare moments of logic during an emotional public hearing, UC Berkeley economist Steven Pitts pointed out that the twin issues of promoting home ownership (40 percent in Oakland, compared with 60 percent elsewhere in the Bay Area) and affordable housing had gotten comingled in the proposed ordinance -- basically setting the two goals in direct opposition to each other. Pitts' comments were a tactful way of addressing basic flaws of the plan, which had been championed by Council Member Delsey Brooks. In reality, the plan amounted to an effort to shift social costs onto to a small segment of the community who would, by definition, be outvoted by the majority. It was good old-fashioned rabble rousing and terribly short-sighted public policy. Among other things, the ordinance would have required: # Landlords to pay $12,500 per unit (average) to Affordable Housing Trust Fund for units not sold to sitting tenants AND limit conversions to 800 units per year. # Sitting tenants to get a 10% discount on buying their unit. # Landlords to pay closing costs up to $15,000 for sitting tenant purchasing their units. # Tenants who do not purchase will receive cash equal to the greater of 6 months rent or 2.5% of selling price. # Seniors over age 62 will continue to get lifetime leases. # Notice to tenants, Oakland's Homebuyers Counseling Agency 6 months prior to approval of subdivision. # Example: 4-plex worth 1,000,000 as condos sold to sitting tenants Payment to tenants 4 x $250,000 x 10% = $100,000 Escrow costs 4 x $12,500 = $50,000 (thanks to Ben for the above distillation) I wish I could report that the city council members recognized that artificially limiting the supply of entry-level condo properties would not help increase the number affordable homes. However, in reality, the reason the proposal was tabled was because tenants felt it didn't give them ENOUGH. Dozens of pro-tenant speakers at the council meeting said they opposed all condo conversions, even the ones that came with a subsidized down payment. It's possible that a showdown between the haves (who can handle a mortgage) and the have nots (who can't) will be avoided by the deflation of the housing bubble, as this doomsday blogger predicts. But it's more likely that the class conflict will just get uglier as Oakland's attractive geographic location continues to drive up property values. Property owners should pay attention since at least half of the city council seems more than happy to screw them.

Posted by Oaktown News on 12/06/2006 at 3:34 AM

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