Wednesday, June 14, 2006 | The San Diego City Council grappled with the effects the condo conversion boom has had on neighborhoods and displaced renters Tuesday. But the new restrictions the council approved might not make much of an impact on a trend that has fallen out of favor with building owners as of late.
The council put into place Tuesday new restrictions for converting apartment buildings into condominiums, hoping to better control a trend that exploded in recent years in San Diego. Since 2004, 11,300 apartments have been turned into for-sale units, and another 7,400 more rental units are currently slated for conversion, city data show.
The new restrictions will likely halt condo conversions in the city, a market that has already cooled significantly in the past few months, experts say.
“These restrictions would have a chilling effect on the market, but they’re useless at this stage of the cycle,” real estate analyst Gary London said. City staff has also noted a sharp decline in condo conversion applications since April.
Also on Tuesday, the council rebuffed activists’ call to study the cumulative environmental impacts of condo conversions citywide.
Under the new regulations, building owners will be required to notify apartment renters earlier that their unit will be converted; pay all displaced tenants a relocation allowance instead of just those of modest means; make room for off-street parking for the new condo owners; and include affordably priced condos in the project if it has 20 or more market-rate units.
The council approved Mayor Jerry Sanders’ proposed restrictions by a unanimous vote – except for the affordable housing requirement, which passed by a 5-to-3 vote. Councilmen Kevin Faulconer, Brian Maienschein and Jim Madaffer voted against the affordable housing element of Sanders’ proposal.
In addition, the council denied a challenge to city staff’s finding that a slated 156-unit condo conversion in Mira Mesa didn’t have a significant environmental impact. Affordable housing advocates filed the appeal in an attempt to force the city to study the cumulative impacts of condo conversions on the city. The appeal was denied by a 7-to-1 vote, with Councilwoman Donna Frye casting the only support for the activists. The activists have also challenged the matter in Superior Court.
All but one of the new condo conversion requirements will apply to nearly 6,000 housing units that are already in the conversion pipeline. The parking requirement will only be subjected to new conversion applications.
The Citizens for Responsible Equitable Environmental Development and the Affordable Housing Coalition have challenged another 79 condo conversion projects citywide. Those 80 properties by will not be subjected to the new regulations. The other appeals were scheduled for the council’s consideration Tuesday, but the City Attorney’s Office determined that they were not properly noticed under the state’s open meeting laws.
Attorney Cory Briggs, who represents the activists, said the California Environmental Quality Act, known as CEQA, requires that the impact of condo conversions be studied. He argued that the volume of condo conversions strained everything from traffic to housing affordability, as well as raising health concerns from such substances as asbestos.
“We think a good government studies their actions before they impose them,” Briggs said.
Several members of the community, city staff and the council scoffed at Briggs’ argument, saying the environmental law shouldn’t be used to study social and economic impacts.
City Attorney Mike Aguirre opined last fall that the city should study these impacts of condos. But most council members said they should not use the appeal against one specific property as the springboard for requiring a study for all projects.
“I, too, want a comprehensive housing solution. I don’t know if we have the resources to do a citywide study,” Councilman Ben Hueso said.
Instead, council members propped up the restrictions they passed Tuesday as the example of how they want to address the unintended consequences of condo conversions, such as the displacement of renters. Many council members said conversions seemed at the time to be a good way for prospective homebuyers to get a foot in the door.
“When we opened the door, thousands came in and we saw a new kind of problem,” Councilwoman Toni Atkins said.
Under the new guidelines, displaced renters will be given a 60-day notice that their lease will be terminated to make way for a conversion. Residents formerly only had 30 days.
Also, if a condo building has more than 20 units that aren’t considered “affordable” under federal guidelines, one out of every 10 units must be affordably priced for the average family. Whereas the citywide inclusionary zoning ordinance allows builders to pay an in-lieu fee if they don’t want to set the homes, builders must include the affordable homes on the site of the converted building under the new restrictions.
The new law also requires that all displaced renters receive three months worth of their rent in assistance. Before, only tenants that earned less than the average income could receive relocation assistance, and it would apply only if there was a citywide vacancy rate of 7 percent of less.
In addition, converted buildings will be required to provide more off-street parking. Builders say it is the least feasible of the new guidelines because it involves setting aside space on the property and it doesn’t simply add a new cost.
Affordable housing advocates said they wished the restrictions went further and have made no bones about trying to shutdown condo conversions altogether.
Jim Waring, the mayor’s land use chief, said he understood developers – a solid political base for Sanders – would be skeptical of the new changes, but said he thought the new guidelines provided certainty. Both the relocation assistance and notice requirements streamline processes that have been confusing up until now, he said.
“From day one, they will know what they’re getting,” Waring said.