Real estate consultant Jerry Williams looks at the rental housing in this city’s run-down neighborhoods and sees a path out of poverty for tenants -- if the city would only make it easier for them to purchase their units.
“What we’re trying to do is generate wealth,” said Williams, who, along with his boss -- real estate broker Michael Smith -- envisions creating a whole new class of low- to middle-income homeowners. “We’re trying to empower these people to create new lives for themselves.”
But when a city councilwoman embraced the concerns of the real estate firm and quietly proposed that the city scrap its 23-year-old restrictions on condominium conversions, tenants’ rights advocates objected loudly. And in this city better known for its murder rate than its mortgages, the debate has become another fight between the haves and have-nots.
The Bay Area’s technology boom triggered a wave of gentrification in the late 1990s that altered the complexion of the region. As San Francisco rents soared, middle-income renters found a haven in Oakland, displacing some of the city’s poor. The current proposal, tenants’ advocates fear, would only spur more displacement by pricing locals out of their homes.
“We’re talking about converting the city for an entirely different population than the ones who live here now,” Oakland Tenants Union co-founder James Vann said at a recent Planning Commission meeting packed with opponents of the proposal. “Nobody in the flatlands will be able to afford a condo for $300,000,” the low-end price Vann and others predicted the converted units would command.
If proponents of the change prevail, landlords who convert buildings of five or more units into condominiums would no longer have to replace them with an equal number of rental units or purchase credits from someone who has. And under state law, the new condominiums wouldn’t be subject to Oakland’s rent control ordinance.
The neighboring cities of Berkeley and San Francisco place tight restrictions on condominium conversions, limiting the number and requiring that a certain percentage of tenants in converted buildings become owners. The proposed change to Oakland’s law contains no similar provisions -- although state law requires that tenants be granted the right of first refusal.
Critics also argue that the proposal is payback for landlords who fiercely opposed a tenants’ rights measure that was narrowly approved by voters in 2002. The measure prohibits evictions unless landlords can cite at least one of 11 listed criteria and protects the elderly, disabled and chronically ill.
Since then, however, landlords have won several key victories in disputes with Oakland’s City Council. Rental restrictions were lifted from landlords who accept federal housing subsidy vouchers. And last fall, rent control was abolished for two- and three-unit buildings where an owner or close relative is an occupant.
Adam Gold, lead organizer for the tenant advocacy group Just Cause, said allowing widespread condominium conversions would further weaken protections for Oakland’s low-income renters at a time when they have already been priced out of several thousand new market-rate units being developed in their neighborhoods. Those projects are part of Mayor Jerry Brown’s effort to redevelop a city plagued by poverty and crime, and bring 10,000 new owners to downtown Oakland.
“We maintain very strongly that there can be healthy and vital working-class communities,” Gold said. “To solve West Oakland’s problems doesn’t mean you have to bring in a bunch of wealthier people. It means you have to get people jobs.”
At issue is a 1981 ordinance that put a damper on condominium conversions by requiring owners to replace each new condo in the city’s desirable Lake Merritt and Adams Point neighborhoods with a rental unit in that same area. In an eight year-period in the 1970s, those neighborhoods lost 25% of their rental stock to conversions, according to Vann of the Oakland Tenants Union. (Outside that designated area, only conversions of buildings with five or more units require replacements, and those can be built anywhere in the city.)
The ordinance all but stopped conversions of larger buildings citywide and eliminated them completely in the area surrounding Lake Merritt, said Oakland Housing and Community Development Director Roy Schweyer. In the last few years, Schweyer said, a handful of tenant groups interested in buying their buildings approached his office for help. (Residents can purchase their buildings as tenants-in-common but often avoid doing so because that approach links them on shared deeds and mortgages.) Schweyer said he also tried to help Williams’ group -- Michael Smith & Associates -- hunt down conversion credits, but was unable to do so.
Meanwhile, Smith made contact with his councilwoman, Desley Brooks, who asked for the law to be rewritten. The revamped ordinance is under consideration by the Planning Commission and has not yet been reviewed by the City Council. But Brooks said the response had taken her by surprise.
“My whole goal is to find a way that people who live in Oakland, who work in Oakland, can afford to buy something in Oakland,” she said. “We have created an environment where people have lost hope. We’ve got a city where people are turning on each other. We’ve got people leaving because they can’t afford to live here. We’ve got to become creative with the limited resources we have.”
Mayor Brown said in a brief interview recently that he supported the proposal as a means to increase Oakland’s homeownership rate, which stands at 41%. Over the years, Brown has bristled at criticism that his housing proposals promote gentrification, saying developers won’t build if they are forced to subsidize units and that attracting residents who care about neighborhood improvement is good policy.
“Homeownership is as American as apple pie,” he said, dismissing critics of the proposal. “Maybe those tenants want to become owners.”
Steven Edrington, executive director of the Rental Housing Assn. of Northern Alameda County -- the only group to speak in favor of the proposal -- said tenants would still be covered by the eviction protection measure, although he conceded that new owners would be entitled to evict in most cases if they planned to move in themselves. Furthermore, the conversion process would remain cumbersome enough to discourage some property owners, he said.
John Gutierrez, an Oakland attorney who facilitates condo conversions throughout the Bay Area, agreed. Much of Gutierrez’s practice focuses on converting tenancies-in-common into condominiums, and he expects a similar market to emerge in Oakland.
As much as Brown has struggled to lift up his city, Gutierrez noted, the invasion of young professionals that many feared would overtake Oakland has dwindled with the recession. Many new condos at Lake Merritt and Jack London Square are sitting empty, he said.
“Oakland has always been the poor stepsister of San Francisco, and that remains true today,” said Gutierrez, who supports the change in the law. “I don’t think there’s going to be this big inflow of outsiders who aren’t already Oakland residents coming in to buy these units.”
Meanwhile, Williams, the real estate consultant, said he had identified 20 buildings in East and West Oakland where owners were willing to convert, and projected mortgages would not exceed existing tenant rents. But Williams said he couldn’t say for sure whether tenants would jump at the chance because they had not yet been informed of the potential conversions.
“We don’t want to lend false hope to these people,” he said.