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Oakland Condo Conversion Proposal Response

I found this post on the Yahoo Message Board for Adams Point. It's a long response to the proposal to ease conversions of apartments to condos.


* 3 City Councilmembers led by Ignacio Dela Fuente have put a
city-wide proposal to gut Oakland's existing condo conversion
protections ON THE FAST TRACK with only 2 months of public hearings
and no study on the impacts, including displacement of vulnerable
tenants and exacerbating declining school enrollments. They want it
passed before Mr. Dellums takes office.

* IF YOU ARE A RENTER, increased condo conversion means that you may
be evicted from your home and forced to find new housing in an even
more difficult rental market.

* There will be NO RENT CONTROL PROTECTIONS if the new condo units are
re-rented. Over 25% of Oakland's current condos are already being
rented out.

* OVER 90% OF OAKLAND RENTERS won't be able to afford the new condos.
Average condo prices in Oakland are $350,000-$400, 000. The monthly
cost of owning a unit is more than twice the monthly cost of renting.

* INCREASED EVICTIONS = more homelessness, segregation, overcrowding,
dangerous housing conditions, increased poverty and violence,
premature death, stress, social and academic challenges for children,
and disproportionately greater impacts on elderly, disabled, and
low-income tenants and people of color.


When: Saturday, 11/18/06, 9:30-1pm

Where: Oakland's Chinatown Pacific Renaissance Plaza Courtyard (by the
Oakland Asian Cultural Center & Library & site of mass evictions for
market condo sales)

Program: Training 9:30-10:30; Rally 10:30-11; Street Education in key
neighborhoods & districts 11-1

For more information, CONTACT ACORN:

510-434-3110 ext. 229

Myths and Realities of the Condo Conversion Proposal


Myth: Condo Conversion creates homeownership opportunities for Oakland

Reality: According to the City Staff Report on Condo Conversion, only
10% of Oakland renters can afford a median-priced condo in
Oakland--$375, 000. [ii] Based on U.S Census data, that means only 5.5%
of Oakland Black renters can afford to buy a condo. Only 2.9% of
Latino renters, and 7.1% of Asian renters could afford a median-priced

Myth: Condo Conversion enables families to stay in Oakland.[iii]

Reality: The policy would actually decrease the total number of rental
units in Oakland by up to 800 to 1,500 rental units per year.[iv] The
proposed changes allow landlords to convert existing rental units to
market-rate condos without building any new rental units.[v]
Decreasing the number of rental units contributes to higher rent
across the Oakland rental market, making it more difficult for working
families to afford to live in Oakland. As the City Attorney's office
stated, rent control protections are gone once the units are converted
and under new ownership.

There is already a current crisis of declining enrollment in Oakland
public schools.[vi] OUSD enrollments have dropped more than other
California urban school districts.[vii] African-American student
enrollment, for example, has dropped 25% in the last five years.[viii]
This condo conversion proposal will further decrease student
enrollments as many families are forced out to make room for new condo
owners without school-aged children. OUSD found that o]f the nearly
1,700 market rate units, only 3 students attend OUSD schools.[ix]
Indeed, OUSD reports that e believe the eclining enrollments are a
result of a change in Oakland demographic makeup. This change is part
of a process of entrificati on?in which middle-class or affluent
people migrate into an area, displacing earlier, usually poorer,
residents.?[ x]

Oakland is currently experiencing an affordable housing crisis[xi] and
cannot risk the loss of more affordable rental units. The Oakland area
is ranked as the 6th least affordable metropolitan area in the nation,
in terms of rental housing affordability. The City's proposed repeal
of the one-to-one replacement unit requirement will only further
exacerbate the current affordable housing crisis. The proposed
Affordable Housing fee of $8,000-18,000 per converted unit is wholly
insufficient to fund replacement housing. Oakland renters already face
serious problems of overcrowding, substandard conditions and excessive
cost burdens. Over 56% of extremely low-income renters (0-30% of
median income) pay more than HALF their household income on rent.[xii]
To put this severe cost burden in perspective, a household that spends
30% of its income on rent is at risk of having insufficient resources
left over for food, clothing, and other necessities. [xiii]

In L.A., where thousands of apartments have become condos since 2004,
conversions have changed neighborhoods, forcing low and moderate-
income families to move.[xiv] In Seattle, condo conversions have
displaced thousands of renters. [xv] In N.Y., landlords are evicting
market-rate tenants to convert units into condos. Tenants who have
been pushed out are facing a shortage of good rentals, because
conversions are cutting into the supply of apartments and driving up

Myth: The policy will allow tenants to buy the unit they live in.[xvii]

Reality: Current tenants face significant challenges in buying a
converted condo, as owners will pay more than double for the same
unit. Under the proposal, there is a 5-10% reduction on price for
tenants, but a tenant only has 90 days to come up with a down payment
before the unit is placed on the open market.[xviii] The City Staff
Report finds a uge affordability gap?br> between the median-income of
the average Oakland renter household and the price of market-rate
condos.[xix] Even if a tenant can buy their unit they will pay
substantially more just to continue living there. The average rent for
a two-bedroom unit is $1,200 while the average mortgage for a
two-bedroom condo is $3,000.[xx] The proposal also fails to address
the challenges of maintaining a home, especially in the current
climate of rising number of foreclosures. [xxi]

Myth: Homeowners are more likely to keep their communities safe and

Reality: Renters have a stake in Oakland too. Recent research
indicates homeowners are not any more likely to be positively involved
in their communities than renters. A recent study by HUD concludes,
here is at best only a slight tendency for low-income owners to be
more socially involved?br> than renters.[xxiii] Furthermore, the HUD
study finds there is ittle evidence that low-income owners, in
particular, are more involved with neighbors.&# 59098;xxiv]

Myth: The current system benefits developers while the new policy
would benefit the City by establishing an Affordable Housing Trust
Fund. [xxv]

Reality: City residents will benefit less under the policy because of
the decrease in affordable housing and because the trust does not
adequately support first-time homebuyers. Currently, a landlord is
required to purchase a onversion right?that pays for the replacement
of every converted unit with another rental unit.[xxvi] This ensures
the total number of rental units in Oakland is not decreased by condo
conversions. However, the policy will allow the landlord to pay on
average $12,500 per unit onversion fee?br> into a Housing Trust
Fund.[xxvii] That money will go to the City but it is not enough to
create a new rental unit, nor is it enough to support the average
Oakland renter wishing to become a first-time homebuyer.[xxviii]
According to the City Staff Report on Condo Conversions, he proposed
range of conversion fee would not provide amount of funding necessary
to close the affordability gap for a typical Oakland renter household
?nor would it provide sufficient funds to build replacement housing.[xxix]

Myth: The housing market is softening, this is the perfect time for
renters to buy condos!

Reality: Market-rate condo prices are out of reach for most Oakland
renters. According to the City Staff Report on Condo Conversions, the
current average median household income of Oakland renters is
approximately $35,000-40,000. [xxx] An affordable unit for purchase to
these households would be approximately $185,000. BUT the median
priced condo in Oakland is $375,000. According to the City Report,
even with the City first-time home buyers program a significant
affordability gap for the average Oakland family would remain.[xxxi]

Under some economic circumstances, an increase in the supply of condos
could result in a decline of prices, BUT the high demand for condos in
the East Bay would result in the price impacts of conversions being
neutral on condo prices.[xxxii] In hot housing markets, new affordable
units must be built to increase affordable homeownership
opportunities. [xxxiii]

Myth: The policy would limit conversions. [xxxiv]

Reality: The policy encourages conversions not limit them. The
proposal would limit conversion to 800 to 1,500 units per year, but
that is more than all the condo conversions in Oakland since
1981.[xxxv] 2006 has already seen a record number of conversions in
Oakland,--390- -which is more than all the condo conversions between
1981-1999.[xxxvi] By making it easier for landlords to convert rental
units into condos the proposal would accelerate this process.

Myth: The policy will help 15,000 Oaklanders become homeowners over
the next ten years.[xxxvii]

Reality: For Oakland renters to afford market-rate homes they need
housing-wage jobs and proven homeownership strategies, not condo
conversions. According to the City Staff report, the income required
to purchase a $375,000 unit is approximately $75,000 a year.[xxxviii]
Efforts to help Oaklanders become homeowners should include the
promotion of housing-wage jobs in Oakland and proven homeownership
strategies.[ xxxix][xl]

The Brookings Institution, the Urban Institute, and The Joint Center
for Housing Studies of Harvard do not promote condo conversion as an
effective strategy for increasing homeownership among moderate- and
low-income households.[ xli] The most successful method for promoting
homeownership has been to place governmental pressures on lenders to
meet the needs of underserved groups.[xlii]


[i] City Councilmember Ignacio De La Fuente, ffordable Homes for
Oaklanders Initiative?Power Point Slide 9.

[ii] Oakland City Planning Commission, Staff Report October 18, 2006,
p. 3.

[iii] De La Fuente, ffordable Homes? Power Point slide 9.

[iv] Staff Report, 3.

[v] Id.

[vi] Lapkoff & Gobalet Demographic Research, Inc. mpact of New
Housing Developments on OUSD Enrollments and Facilities?Sept. 6, 2006.

[vii][vii] Impact of New Housing Developments on OUSD Enrollment and
Facilities. Lapkoff & Gobalet Demographic Research, Inc., 09/05/06

[viii] Enrollment drops by race: Native American: dropped 18%; Asian:
dropped 19%; White: dropped 6%; Latino increased 6.5%

[ix] Id

[x] emographic Update for Facilities Planning? Lapkoff & Gobalet
Demographic Research, Inc. May 25, 2005. See also Blash, Shafer,
Nakagawa, Jarrett. etting Behind the Headlines: Families Leaving San
Francisco? September 2005. See also

[xi] The Oakland Municipal Code (OMC) ?.22.10 states that "[t]he City
Council finds that a shortage of decent, safe, affordable and sanitary
residential rental housing continues to exist in Oakland. This
shortage is evidenced by a low vacancy rate among such units
throughout the city and a continually increasing demand for such
housing." (Ord. 12538 ?1 (part), 2003; Ord. 12399 (part), 2002).

[xii] Oakland CEDA Consolidated Plan for Housing and Community
Development, 2005-2010, 5/13/05 at 18.

[xiii] Id. at 17.

[xiv] Annette Haddad, Rent Increases in State Outpace Much of the
West, L.A. Times, July 20, 2006; Peter Dreier, The condo that ate my
rental, L.A. Times, May 21, 2006.

[xv] Jennifer Langston, City Renters Lose as Condo Switch Soars
Thousands Displaced Many Can Buy, Seattle Post-Intelligencer, March
20, 2006, at A1.

[xvi] Josh Barbanel, Tenants Stuck as Apartments Become Condos, N.Y.
Times, April 30, 2006.

[xvii]Dela Fuente ffordable Homes? Power Point slide 13 (claiming the
proposal would increase tenant benefits).

[xviii] Proposal to revise City of Oakland Subdivision Regulations
16.36.050(4) .

[xix] Staff Report p.7

[xx] EBCLC Condo Conversion Report 2004.

[xxi] Marni Leff Kottle ay Area foreclosures on rise ?adjustable
loans a growing threat? San Francisco Chronicle October 27, 2006.

[xxii] Heather MacDonald, lan to Conquer mpossible Dream?, Oakland
Tribune September 29, 2006.

[xxiii] U.S HUD, he Homeownership Experience? 111.

[xxiv] Id.

[xxv] De La Fuente, ffordable Homes? Ppt. Slide 10. A building owner
will pay $12,500/unit on average into the Affordable Housing Trust Fund.

[xxvi] The Oakland Municipal Code (OMC) ?6.36.070.

[xxvii] Dela Fuente ffordable Homes? Power Point slide 15.

[xxviii] City Staff Report, 7

[xxix] City Staff Report, 7.

[xxx] Id.

[xxxi] Id.

[xxxii] Office of the City Manager, City of Berkeley Staff Analysis of
the Proposed Condominium Conversion Initiative, July 18, 2006, at 60.

[xxxiii] The Brookings Institution & the Urban Institute, Rethinking
Local Affordable Housing Strategies:Lessons from 70 Years of Policy &

[xxxiv] Dela Fuente ffordable Homes? Power Point slide 12.

[xxxv] Oakland City Planning Commission Staff Report Draft September
28, 2006.

[xxxvi] Id.

[xxxvii] Dela Fuente ffordable Homes? Power Point slide 19

[xxxviii] City Staff Report, 7.


[xl] See, e.g. The Brookings Institution & the Urban Institute,
Rethinking Local Affordable Housing Strategies:Lessons from 70 Years
of Policy & Practice.

[xli] See The Brookings Institution & The Urban Institute, Rethinking
Local Affordable Housing Strategies: Lessons from 70 Years of Policy
and Practice; Urban Institute, Keeping Neighborhoods Affordable: A
Handbook of Housing Strategies for Gentrifying Areas; Joint Center for
Housing Studies of Harvard University, The State of the Nation
Housing 2006.

[xlii] The Brookings Institution & the Urban Institute, Rethinking
Local Affordable Housing Strategies:Lessons from 70 Years of Policy &
Practice; see also Fannie Mae, ffordable Housing Solutions,?availabl e
at, http://www.fanniema e.com; Freddie Mac, elping Families atch the
Dream,? available at,
http://www.freddiem ac.com/news/ in_the_news/ whitehouse_ 1016.htm.
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