On June 13, the San Diego City Council will rule on an affordable-housing group's contention that 80 condo-conversion projects should be denied permits unless they undergo an environmental review. To put this into perspective, in the past six months, only one proposed condo conversion has come before the City Council on appeal.
The appeals, filed several months ago on behalf of the San Diego Affordable Housing Coalition by attorney Cory Briggs, all argue that too many conversions happened with too little government oversight. The appeals demand that the city assess whether the conversion of 452 apartment buildings, representing 11,366 rental units, has had an impact on the environment, on infrastructure or on tenants who've been displaced. There are another 217 projects, or 7,385 units, in the city pipeline, according to numbers from the city's Development Services Department.
Assistant City Attorney Karen Heumann said Tuesday that her office will send a memo to the City Council, warning that the hearings weren't properly noticed to the public. Anyone living within 300 yards of a project needs to be informed of the hearing and given the opportunity to testify. Pam Hardy, spokesperson for City Council President Scott Peters, said it's city policy that when there are more than 1,000 notices to be mailed, the city instead places an ad in the Union-Tribune listing the hearing date and all properties involved. Heumann countered that the ad option only applies to one-issue hearings and this one covers 80. "They obviously recognize there's a noticing requirement, and they're fudging it," she said.
Hardy said Peters docketed all 80 appeals for the same meeting because they all focus on the same issue.
City Attorney Mike Aguirre, on Monday, called the mountain of appeals "a disaster," the product of the City Council not heeding a memo he issued in November that said the city should indeed study whether or not there's an impact from the high rate of condo conversions.
Usually, construction triggers a law called the California Environmental Quality Act (CEQA), which requires local governments to assess a project's environmental impacts. The city's Development Services Department, which oversees condo conversions, considers conversions exempt from CEQA since the projects involve work on existing facilities-there's no razing or building on virgin land.
A group calling itself the Coalition for Affordable Homes in San Diego has challenged Briggs' position, arguing there's no "substantial evidence" that conversions are having a negative environmental impact.
Briggs says there's evidence that condo conversions are having an impact. He points to the public-education campaign launched last month by the county's Air Pollution Control District after more than 100 condo-conversion projects were cited for improper handling of asbestos. CEQA, Briggs said, "demands that potential health impacts... must be addressed." And, he said, if a study finds asbestos is indeed a problem, it's one that can be easily remedied.
"What do you do? In order to get the certificate of occupancy, for example, you [would] need to bring in a certificate for remediation from a licensed asbestos remover that says we removed it in accordance with the regulations and disposed of it in accordance with the regulations," he said. "It's a little more paperwork, but I think that paperwork's worth it."
Briggs said requiring environmental review doesn't equal a moratorium on conversions. He said there may be no problems with conversions at all, but only a study would confirm that. "If you never even ask the question, there's no hope in getting to the answer."
Heumann agrees. "There are people in our office that think there are [impacts] and people... that think there aren't, but everyone agrees that nobody knows. For goodness sakes, we're at 20,000 conversions. At what point do you say enough? San Francisco limits to 200 conversions per year-we're at 20,000 in a year and a half. Think about that."
Briggs said it's not his intent to paint condo conversions as bad. "My clients and I don't have any doubt that the majority of condo conversions... in one form or another, improve the quality of the neighborhood. We don't have any doubt that they have some positive aspects. But, look, nuclear energy has positive aspects, too. It's a very efficient, very clean energy source. The problem is: What do you do with the waste? I'm not going to say condo conversions are the equivalent of a nuclear meltdown, but if you're someone who can barely afford a place to live, if you can barely feed your family, and now you're told, by the way, you have to move, and who knows where you're going to find another place... it's pretty traumatic."
On the same day Briggs argues his appeals, the City Council will also vote on whether to update the city's condo-conversion ordinance-the fact that they're doing so, Briggs said, underscores his contention that there are problems. The June 13 vote looks at whether to expand tenant-relocation benefits and require more parking spaces. Right now, low-income tenants get three months' rent for relocation costs; the update would afford that payment to anyone displaced by a conversion, regardless of personal income, as long as the vacancy rate is under 7 percent. Numbers provided by the San Diego Housing Commission show that in many areas with a lot of conversions-downtown, City Heights, North Park-the median income is less than $36,000. As for vacancy rates, the San Diego County Apartment Association this week released a report showing vacancy rates haven't gone above 4.8 percent in the past 10 years; currently, San Diego's vacancy rate is 3.4 percent, down half a percent from a year ago.
The ordinance would also require one parking space for every studio or one-bedroom unit, 1.25 parking spaces for every two-bedroom unit and 1.5 parking spaces for every three-bedroom unit. Most conversions involve buildings constructed prior to any sort of parking-space requirement.
Chris Christensen, CEO of Condoconversions.com, sees it all-Briggs' lawsuits, the ordinance update-as unnecessary meddling at a time when sales are slowing and prices are dropping; new regulations will only drive prices up, he said.
"Many of the units, by virtue of market forces alone, and no political action whatsoever, are actually priced in that so-called affordable bracket," he said. "Because there's so much product out there and so many consumer choices, the reality is that in many mid-city areas... they're selling those units for $280,000, $290,000, $300,000, $320,000.... It goes to show that if you have a laissez-faire approach and... let market forces work properly, then not only will you bring down the price of affordable housing, but you'll end up getting what is even more important, which is a balance between rental housing and for-sale housing."
Like a lot of folks involved with conversions, Christensen champions the benefits of homeownership that conversions offer to those priced out of the traditional home market. The national homeownership rate is close to 70 percent; in San Diego, it's 50 percent. Christensen thinks that national/local gap needs to close, and government regulations aren't going to help matters.
But not everyone agrees.
"Many people are not meant to be homeowners," said San Diego real-estate analyst Sanford Goodkin. "It's not a sin; it's just the way of the marketplace that they can't afford to own a house."
Goodkin described the current vacancy rate as a "severe-shortage situation."
"When it hits 3 percent or 2 percent, it becomes a crisis situation," he said.
Goodkin wants to see tougher regulations to protect rentals. "Don't allow apartments which are very affordable to be converted into anything but what they are already with the rationalization of, well, they're going to come on the market as very affordable. They're not. They're going to be more affordable than something more expensive, but they're not truly affordable."
City Councilmember Toni Atkins, who represents parts of the city where most of the conversions have happened-North Park, Hillcrest, Normal Heights-said her initial support of conversions is waning.
"I think we've kind of hit a level where there are negative impacts on renters," she said. She wishes the City Council had gotten out ahead of the issue-and city staff had kept better track of housing stock-rather than reacting to community concerns.
"We waited too long," she said, adding that it might be too late for any kind of study.
"I think the market is making some corrections, but what I'd like to do is talk a little bit about whether it's time to really shut the door.... I wonder at this point whether we shouldn't take a harder stance and make the criteria to do conversions a little bit more stringent. Where we are now is we really need to be doing some promotion to incentivize the development of apartments and rentals."
Richard Lawrence, chair of the Affordable Housing Coalition, has encouraged the City Council to consider adding a "life-long lease" provision to the ordinance that would allow seniors and disabled folks to remain in their units, paying the same rent, if their building is converted. San Francisco has such a law in place. San Diego's ordinance also lacks protections for tenants who rely on Section 8 rental assistance. Finding an apartment that accepts Section 8 vouchers is already a challenge.
Christensen said he's not blind to tenants' plight. He said he's been pushing the city to form a condo-conversion task force for a while, similar to ones he's been on in Imperial Beach and El Cajon.
"What happens is the challenges... they get hashed out pretty quick and we start to very quickly come to terms on what the priorities are-is it tenant displacement, is it quality of construction, is it parking?" he said. "What are the real problems and how do we deal with those effectively?"