Glossy mailers, press tours. Both sides are pulling out the stops to sway public opinion and the votes of the Oakland City Council members who are still undecided on the issue.
The proposal has been revised since it was first introduced and there are several supplemental information reports for the public and council members to digest before Tuesday's council meeting.
City Council President Ignacio De La Fuente (Glenview-Fruitvale), and councilmembers Desley Woods (Eastmont-Seminary) and Henry Chang (At-large), are the authors of "The Affordable Homes for Oaklanders Plan." It seeks to revise a 1981 condominium conversion ordinance and create a larger stock of less expensive homes affordable to renters. The desired result would be to boost Oakland's homeowner rate from a lowly 40 percent to 50 percent by allowing up to 800 conversions per year.
De La Fuente says measures in place to increase Oakland's percentage of homeowners have fallen flat. The condo conversion proposal is a good way to turn that around and provide maybe the only chance for renters to move up and realize the American dream of owning their own home, De La Fuente said.
The plan would make it easier to convert apartments to condominiums by easing an onerous requirement of having to replace each apartment removed from the rental market with another rental unit.
Instead owners could pay a fee into a housing trust fund, expected to generate $8,000 to $15,000 per condominium, about $10 million a year, that could be used to help first-time homebuyers with downpayments.
Critics argue the plan will not create home buying opportunities for the majority of Oakland's 88,000 renter households because they earn too little to buy a $350,000 or $400,000 home. Despite tenant protections built into the proposal, such as relocation benefits and lifetime leases for older renters, critics fear too many tenants will be evicted when they cannot buy.
The number of condo conversions has swelled in the past couple of years even without the revised ordinance. More than 400 applications for conversion have been filed this year.
Gracie Jones, housing paralegal for the East Bay Community Law Center, counsels tenants who have been served with eviction notices. She said she's had cases where renters received a letter telling them their apartment was being converted, and giving them 10 days to decide whether to buy.
"If you have a mother with six children paying $630 a month and you ask them to pay $330,000 to $400,000 for a condo, there's no way," she said.
But the authors say there is a safety net for low-income renters. Rent control laws are still in effect, and as many as 26,929 rental apartments that are owned by the Oakland Housing Authority accept Section 8 housing or receive other city or federal subsidies, are protected and cannot be converted.
Part of the confusion stems from rival data provided to the public. Alex Pederson, De La Fuente's legislative aide, calculates that a renter earning $50,000 could afford a $300,000 condominium with only the 10 percent discount required under the condo proposal.
But information prepared by city housing staff shows that a three-person renter household with an income of
$50,000 could afford to pay $326,897 only if it received about $120,000 in city, state and federal downpayment assistance, and only $244,125 without such assistance. And the higher the income, the less a renter can receive in federal, state and city subsidies.
According to the staff's analysis, the average Oakland renter earns $35,000 and could afford to buy a $159,734 condominium. After factoring in approximately $120,000 in downpayment assistance, and a 10 percent discount required by the seller, that same renter household could afford to purchase a $252,363 condo.
"There is a considerable gap between what people can afford, even with the prepayment products and the likely price of these condos, which won't be (as low as) $300,000, and $400,000," said Councilmember Nancy Nadel (Downtown-West Oakland). "Affordability is in the eye of the beholder."
Councilmember Jane Brunner (North Oakland) said the new fees will not begin to cover the amount of assistance needed to help the average renter buy a first home.
The city provides $75,000 in downpayment loan assistance to between 50 and 60 low-income homebuyers every year before the pot of money runs out. It would take $60 million per year to provide the same level of assistance to 800 renters who wanted to buy their apartments, she said. The new fees are expected to generate about $10 million a year, leaving a $50 million shortfall, according to the staff report.
Pat Kernighan (Grand Lake-Chinatown), considered to be the swing vote on the issue, was still trying to wade through all the information and had not yet made up her mind whether to support the proposal.
"I do think that the idea of trying to provide more homeownership opportunities is a good one, and if it could be done without displacing renters and the condos were a good investment for people I would support that," Kernighan said. "But I still have many questions about how this would work in real life."
Among other things, Kernighan said she was concerned that some renters would end up buying their apartments in older buildings where maintenance has been deferred because that is what they can afford. She worries that they will not have the money to pay for electrical, structural or plumbing problems that appear later on.
On top of that, Kernighan and other council members were distracted by a flood of e-mails and phone calls from their constituents since a pro-condo conversion flyer paid for a pro development group, Better Housing Coalition, was sent out last week. The mailers were customized for each council district and provided the elected official's name and phone number, leading many recipients to incorrectly surmise it was sent by their city council representative. BHC president and CEO said he was just trying to educate the public about the virtues of the plan.
Brunner said she does not support the proposal as it is written and has urged her colleagues to consider it along with a broader package of affordable housing plans, such as inclusionary zoning. She also wants to make sure that the condo applications are equitably dispersed around the city, and not in North and West Oakland.
"I am in favor of condo conversions, I just think we need to slow down and do the things the people want it to do, which is to create homeownership for Oaklanders," Brunner said.
In anticipation of the council meeting, Brunner requested the city attorney's review of several legal areas, among them:
- A requirement that each converted condo be owner occupied and not rented for a certain length of time.
- The priority for approving an applicant's conversion would go first to buildings with the highest number of proposed sales to tenants.
- Applications for conversions will be denied unless a certain percentage of tenants intend to purchase their units or another unit in the building.
The Oakland City Council will consider the condominium conversion revisions at its Tuesday meeting at 7 p.m., 1 Frank Ogawa Plaza.