OAKLAND — A controversial proposal to allow more apartment-to-condominium conversions as a way to boost affordable homeownership in Oakland failed to win enough support on the City Council early Tuesday morning.

Instead, the council referred the plan to a commission formed to study inclusionary zoning.

The proposal's failure was a defeat for Council President Ignacio De La Fuente (Glenview-Fruitvale), who co-authored the Affordable Homes for Oaklanders plan with Councilmembers Desley Brooks (Eastmont-Seminary) and Henry Chang Jr. (At-large). De La Fuente's staff took the lead on presenting and promoting details of the plan, and the council president promoted it as a way for renters to realize the American dream of owning their own home.

When it was clear the proposal would not muster the five votes needed for passage, Brooks withdrew it and asked that it be sent to a Blue Ribbon Commissionformed in October. That commission's scope will be expanded to include strategies for affordable rentals and homeownership opportunities for moderate-, low- and very low-income residents.

The city attorney had earlier warned council members that the revised conversion ordinance would expose the city to lawsuits because the environmental impacts of the initiative had not been adequately studied. That warning was enough to swing the vote for those who worried about such a dramatic change in city policy.

In her motion, which was unanimously approved, Brooks

also asked that city staff return to the council with recommendations for the following items no later than March 6:

- Develop a citywide Individual Development Account plan to match the deposits of low- and moderate-income residents saving to buy a home.

- Develop a citywide Community Land Trust plan that would create permanently affordable residential and commercial properties.

- Prepare an analysis of Housing Rehabilitation Loan program funds and low-income housing funds that could be used in combination with a condo conversion program to revitalize neighborhoods.

Brooks' motion, heard after midnight, livened up the weary crowd who had signed up to talk on the subject hours earlier and stuck around.

The authors had made several amendments to the conversion initiative during the past month to address concerns and make it more palatable to the public, but the changes failed to quell the opposition. Lobbying was intense on both sides, and went down to the wire.

Brooks said she still believes the plan is a good one, but she realized Tuesday "the compromises weren't there yet.

"We have to begin a dialogue that looks at a comprehensive, citywide housing strategy," Brooks said. "This provides the impetus to address concerns raised on both sides of the aisle."

The plan sought to use condo conversions to create a larger stock of less expensive homes to the average renter, boosting Oakland's homeownership rate from 40 percent to 50 percent in the process.

The plan would have allowed 800 conversions every year and eliminated a requirement that each unit removed from the rental market must be replaced.

Instead, owners would pay a fee into a housing trust fund, expected to generate $8,000 to $15,000 per condominium — about $10 million a year — to help first-time homebuyers with down payments.

The proposed plan included other incentives, such as 10 percent discounts on the sales price and up to $15,000 in closing costs paid for tenants who want to purchase their apartments.

The authors had hoped the initiative would go a long way toward stabilizing neighborhoods and reducing gentrification as more renters purchased their homes. Information produced by De La Fuente's office stated that renter households earning $50,000 a year could afford to purchase a condominium for $300,000.

But critics said the plan would not create homebuying 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 — the typical price for converted condos sold the past 12 months. According to city staff, only 10 percent of the city's renters could afford a $375,000 condominium.

Despite tenant protections built into the proposal, such as relocation benefits and life-time leases for older renters, as well as exclusion of about 26,929 subsidized rental units, some feared the plan would increase evictions for tenants who could not buy.

Affordable housing advocates pointed to the experiences of other cities such as San Diego, Los Angeles, New York and Seattle, where high numbers of condo conversions has led to evictions and a shrinking supply of rental housing.

Even without easing the rules, the number of conversions in Oakland has swelled the past couple of years. Speakers urged the council to pay attention to the details as a new housing policy moves forward.

Janet Kobren recounted how she had rented an apartment in a 22-unit building on Broadway Terrace until it was converted to condos. She couldn't stand the noise and disruption during remodeling of the apartments and moved out. She said the asking prices ranged from $600,000 to $900,000, for what had been moderately priced rentals. Only three former tenants remained, she said.

Marjorie Murray, president of the Center for Homeowner Association Law in Oakland, said that buying a condo might not be the best option for people on limited incomes because of unforeseen costs for repairs or major maintenance to the building that would be passed onto condo owners. She also said the condo association fees quoted by the authors was "totally unrealistic."

The Blue Ribbon Commission will meet next year, and have representatives appointed by Mayor Jerry Brown, Mayor-elect Ron Dellums, City Administrator Deborah Edgerly, City Attorney John Russo, and each council member.

Staff writer Heather MacDonald contributed to this report.

E-mail Cecily Burt at cburt@angnewspapers.com