Condo conversion proposal in limbo 

The Board of Supervisors Budget and Finance Committee chair John Avalos and member Supervisor David Campos both said Monday that they were not pleased about being asked to approve a condo conversion fee proposal as part of Mayor Gavin Newsom’s proposed $6.5 billion budget. The committee postponed any formal decision on the proposal.

Newsom’s condo-fee proposal would allow people long waiting to convert their tenancy-in-common units into condominiums to bypass the lottery process, which allows 200 condo conversions annually, for a fee.

The budget proposal includes the assumption of $8 million in revenue from the program.

But that doesn’t seem like that’s going to convince the supervisors to approve it any time soon. If they don’t, they will have to cut $8 million from somewhere else in the budget.

Avalos said he opposed the program and it would open the “floodgates” for more real estate speculation and increased evictions. He also said the condo conversion lottery is meant to “dis-incentivize” people turning rental units into condos.

Newsom’s budget director Greg Wagner said, “We think this is a reasonable proposal that will generate $8 million of revenue for the general fund while also benefiting the homeowners who are willing to pay the fee.”

Avalos said the committee would not make a final decision on the legislation on Monday.

Here’s how the proposal would work: Newsom’s proposed condo conversion fee program would allow those who participated in the 2010 condo conversion lottery but lost to bypass the lottery system by paying a fee. That means that the program would apply to only 1,799 units. The $8 million revenue assumption is based on the conversion of about 600 units. A decision to pay the fee would have to be made by Feb. 1.

The fee amount is $20,000 per unit. The fee would be reduced for each year the building participated in the condo conversion lottery. There is a 20 percent-per-unit fee reduction if the building has been in the lottery for two years, and an 80 percent-per-unit fee reduction for units in the lottery system for five or more years.

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