Controversy concerning condo conversions

Controversy concerning condo conversions
By George P. Hassett

   Mayor Joseph A. Curtatone has submitted a proposal to the Board of Aldermen to enhance tenants’ rights under the city’s condominium conversion ordinance. Supporters of the proposal say it will add greater predictability and clarity to the current condo conversion process, while opponents contend it will give tenants more rights than homeowners, while weakening the city’s tax base.
  Under Curtatone’s proposal, conversion permits would now be issued simultaneously for all units in one property. The ordinance would require owners to submit proof of tenant notification when applying for a conversion permit, and they would have to provide more notice and response time to elderly, handicapped and low-income tenants before converting rental properties into condominiums. Tenants would be granted more opportunities to purchase their converted condominium as well as increased relocation costs. The ordinance also proposes a permit fee increase to $750 – a figure negotiated by attorneys who regularly practice before the Condo Review Board.
       Bart Foster, a Somerville real estate agent, said the ordinance could be unfair to Somerville homeowners.

 

    “The tenants will have more rights and power over how the property is used than the homeowners,” he said. “The tenants have very little stake in how the property is used compared to the person who actually owns it. It is the homeowner who has to replace roofs and maintain the property, not the tenants.”
     Curtatone said his ordinance is designed to balance the rights of home owners and tenants, and is about fairness not power.
     “The working families who rent in Somerville and want to stay in Somerville should know if they are going to be displaced and they should have the opportunity to do something about it,” said Curtatone.
     With its surplus of multifamily homes, Somerville has become a breeding ground for condominium conversions. In the past two years, the number of condominiums on the market has increased dramatically. According to an April 3 issue of  Banker and Tradesman, a weekly real estate and banking publication, available condo units in the city have increased from 100 to 160 to 275 over the past three years.
     Many in Somerville feel condo conversions inflate market prices, hurt the middle class and squeeze out long-time residents, decreasing a city’s sense of community.
    “Without certain protections, condo conversions can lead to displacement of life-long residents, unpredictability for all tenants and a detrimental effect on the great diversity we have here,” said Curtatone.      
      Foster said limiting home owners’ rights to convert their property to condominiums hurts the city’s fiscal health.
     “Condo conversions help the bottom line of a city’s tax revenue,” he said. “If a two family home is appraised for $400,000, then converted into a condominium and appraised as $600,000 that is more revenue for the city to improve the services it offers all of its residents.”
      He said condo conversions also stimulate economic growth by providing work for local contractors and laborers, who in turn, put that money back into the local economy.
     “If anything, condo conversions really help a lot of the average Joe’s of the world,” he said.
     The ordinance has been sent to the Board of Aldermen’s Committee on Legislative Matters for further review and is slated for discussion at the committee’s May 2nd meeting.

 

 

Comments

[you don't know how lucky you are boy]

Reprorting live from Somerville, Cuba:

Che Guevara, Rebekah Gewirtz and Fidel Castro today liberated Ward 6 of Somerville, USA. Because Guevara, Gewirtz and Castro respect the American people, little violence was needed to topple the Somerville forces led by Jack Connolly and Jimmy Tingle. In fact, guerilla forces took the ward in less than an hour (Connolly's secretary took a 30 minute break, Tingle's -- 20). Enemy forces were preoccupied waiting in the line of Starbucks, The Someday Cafe, Store 24, Diesel, White Hen Pantry and Soundbites. Gene Brune will remain Registrar of Deeds and Mao-Tse Tung is the new Department of Public Works Commissioner. Stan Koty moves up, Eldridge Cleaver-style to become Minister of Information. Lawrence Paolella will be Gewirtz' personal chef. You will learn new details as soon as we do. Signing off, Somervilluba News...

[Martin Edin]

Foster says "that is more revenue for the city to improve the services it offers all of its residents.” Actually, it is more revenue the city has to offer services to its NEW residents. Its old residents have to move out. And if the condo market pulls the tax base up it also raises the tax bases of other homes in the area increasing the cost of owning and living and renting.

The law, while on the right track, is miss-aimed really. Condo conversion is not the real, root, source of what is actually driving people out. Bigger factors are predatory lenders, 50 year balloon mortgages. And minimum wages like the ones offered at big box retail in assembly square that are so for below the affordable cost of living in our town that lifelong residents have to move to New Hampshire. Unless the old time Somerville people can get high tech jobs in the biotech industry where Cambridge just built lots of huge office spaces in Kendall square they have to move out. All of the new people getting jobs there will be looking for a place to live. These are the real factors driving people out. These things are happening because current owners, residents, and renters don’t know how to fight together. Somerville owns a lot of properties, you can give it away and suffer the consequences like folks in Louisiana living next to pollution spewing factories and environmental disasters or you can work together and live like the folks in Alaska who get oil checks and dividends each year. It is your land, what do you want to do with it?

Also, would this law affect owner occupied multifamily properties or just absentee landlord properties. I believe owner occupied properties are protected from some of these types of laws.

[????]

Its a lie that condo conversion helps the tax base. A two family absentee owned rental property appraised at $400K would bring the same tax revenue as a two family condo building assessed at $600K because of the 30% residential exemption. If it appraises for less than $600K as condos, the rental building would have brought the city MORE tax revenue.

[Please STFU!]

Hey Bart, Gordon Geko called and said you're greedy bastard.

[Gordon Geko]

Greed is Good!

[One Year]

There is already a 1 year notice period. That is enough notice and actually the notice really shouldn't extend beyond the lease period. Renters don't own the propety and their legal right to live there should stop when lease stops, unless mutually agreed upon.

A condo is way cheaper than buying an entire multifamily; I don't really understand this desire to keep people as renters in crappy run down multis thinking they're better off that way being dependant and not owning anything.

Stop complaining about the cost of living and just get a job and work hard.

[Yorktown Street]

The purchase price of a condo is usually way cheaper than the purchase price of a multi-family: agreed. But how do you pay the mortgage? The traditional answer was to buy a two- or three-family, live in one unit, rent out the others at reasonable rents, and use your rental income to help pay it. When multi-families are split up, the only people who can own are those who can pay the mortgage out of their own income. That excludes a lot of us.

The two-family house gives one moderate-income family with a down payment a chance to own, plus it gives one low-income tenant a chance to live in town. Condo conversion restricts both units to high-income households.

[notsofastlouie]

1. Tenants who want to buy a condo can choose to buy any of the over 300 condos currently on the market in Somerville: why do they have to buy they one they are renting?
2. Condos are the most affordable kind of housing you can buy. Making condo conversions more difficult and expensive will restrict the supply of condos and make them more expensive. (Giving tenants the right to moving expenses, right of first refusal, and right to stay for years on end causes condo converters and their lenders to tie up their money for a longer period of time; the resulting costs will be reflected in the final price of the unit.)
3. This ordinance won't really giving much value to most tenants, very few of whom really exercise the existing right of first refusal, but it will reduce the value of existing multi-families in Somerville. Do propery owners in Somerville get this?

[David Mahoney]

gentrification is a good thin because we keep doing it.
And it's basically a very good thing.
And even if it isn't, we'll keep doing it.
Because, ultimately, you cannot stop a free market unless people essentially agree with the social premise behind the regulation. Rent-control's "key money" -- under-the-table transfer of a rent-controlled tenancy -- is a prime example that when people value things more than the law is supposed to allow them, then they find their way around the regulations by what becomes illegal transactions. The free market prevails except when there is a very broad social consensus that the regulation is appropriate (e.g. child labor laws.) Only the losers--the people we are trying to protect-- will follow the condo regulations to the spirit of the law.

That's part of the issue with gentrification, at least in cities where the housing stock at issue is primarily owner-occupied units: What could really be done to stop it? At the same time as one is arguing about whether it's a good thing or a bad thing, consider whether it is amenable to social control at all. I'd suggest that gentrification is far too organic and natural a social process and is largely beyond social control, unless one wanted to bring back racially-descriminatory laws.

Even if one wanted to, and I certainly do not, what could one do to stop gentrification? Require all sales be run though some sort of "community commission" to see if the buyer "qualified" and would not change the demographic mix of the area? I hope the absurdity of that is self-evident. One can argue that gentrification should trigger more subsidy for poor people. Well more subsidy for poor people may well be a good idea. But the free-market sale of a house is a transfer of monet from (presumably) a richer person to a poorer one. So who is the loser? How would you prevent a (presumably, let's posit) poorer and blacker person from selling to a (presumably) richer and whiter person? Would anyone dare? It seems to me gentrification, if it is indeed a problem, is not one with any apparent solution. Unless one intends society to remain fixed in some current configuration, I see no plasuible solutions.

[elle]

The only thing the matter with gentrification is that it displaces poorer people, and because the gentrifiers tend to be young, white professionals, it robs a community of its diversity. Otherwise, gentrification usually means better services and amenities for an economically disadvantaged commnity.

The only plausible solution to the negative consequences arising from gentrification is economic parity for the people who are being displaced.

Obviously if you don't have the education and skill set that allows you to make enough money to afford a home or condo in up and coming areas, you have to leave.