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Screwed 

A lawsuit against the city highlights an affordable-housing program's decades of mismanagement — and the middle-class homeowners who lost out as a result.

Wednesday, Nov 25 2009
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Page 3 of 5

"I'm not saying we didn't focus on what was going to happen years out," he said. "We figured that over time that problem would resolve itself, and the solution might be that after 20 years there would be a forgiveness of the subsidy that was built into the program." (Cincotta, now a private land-use attorney at the San Francisco firm of Jeffer Mangels Butler & Marmaro, briefly represented a group of Goldmine Hill homeowners trying to work out a nonlitigious solution to their predicament. He said he has not worked for them in more than a year.)

Notions of a 20-year lifetime on BMR restrictions persisted. Adding to the confusion, restrictions on many of the units, following a now-outdated practice, were recorded on subdivision maps instead of on property deeds, where they would have been more visible to buyers.

A city brochure on BMR condos produced by the Mayor's Office of Housing under former Mayor Willie Brown states that units are "deed restricted for a term of 20-50 years." A 1987 letter from a real-estate broker to a tenant whose unit had been converted to a moderate-income condo, supplied to SF Weekly by the homeowners' attorneys, states, "The sales price of this unit is controlled for 20 years from the date of the first sale." As late as 2005, a memo from Mayor's Office files refers to a condo unit that "may not now still be subject to the 20 years (?)."

Like Flaubert's God in the Universe, the idea that condo restrictions lasted only 20 years was present everywhere and visible nowhere. "We were told any number of ways, any number of times — verbally, not in writing — we were told about this 20-year thing," Oakman said. In particular, he said, one city official — Jeanne Lu, who today is still employed by the Mayor's Office of Housing — "always maintained that the city had no real interest beyond 20 years. She was saying, 'I don't think it would be fair to go beyond 20 years.'"

Oakman said his own unit was appraised at a fair-market value of $765,000 a couple of years ago; by contrast, the city said it could be resold at just over $300,000. For Oakman, the idea of that much money being subject to what he views as bureaucratic whim is hard to accept.

At a hearing last year before the supervisors' Land Use and Economic Development Committee, then-Supervisor Gerardo Sandoval — the only lawyer on the committee at the time, Sandoval became a judge after his last supervisorial term ended in 2008 — said the notion of a 20-year limit on resale restrictions was simply too common to come from rumor or coincidence.

"How did so many people get this wrong? I think the answer has got to be that the city really did contribute to that perception, and that's really hard to get around," Sandoval said. "There is a fairness issue here, and we have been part of the problem."


While condo owners and their attorneys have accused city housing officials of disregard for their property rights, those officials understandably view their responsibilities in a broader context. If today's crop of low- and moderate-income buyers are to have the same opportunities as those who bought condos 20 or 30 years ago, they reason, all the units currently enrolled in the BMR program must remain priced at reduced rates.

A motion filed late last month by the city attorney's office in response to the homeowners' lawsuit pointedly sums up this view. "Having reaped those benefits for up to 29 years, Plaintiffs now seek to change the terms of the deals they struck with the city," it states. "As California courts facing similar claims have concluded, Plaintiffs are simply trying to 'get out of a contract in order to make more money.'"

If you accept housing officials' contention that the condos in question were intended to be permanently affordable, this argument is hard to gainsay. San Francisco, like parts of New York or Los Angeles, is a metropolitan island of fantastically expensive real estate. The acute lack of housing within the buying power of middle-class professionals has gradually transformed this city into what The Economist recently called "a playground for the ultra-rich and a sewer for the underclass."

"Statistically, only 25 percent of residents of San Francisco are owners of their homes. That's the lowest in the country, next to Manhattan," said Tracy Parent, a board member of the San Francisco Community Land Trust who supports maintaining restrictions on the BMR condos. "Our city is very small, and the demand will always be higher than the supply. It's very important to use our public resources to preserve the affordable homeownership opportunities that have been created."

There is also reason to question whether all those involved in the lawsuit against the city have an equally strong case. Plaintiff Nancy Trogman told SF Weekly that she knew about restrictions on her condo over the years, but only vaguely, and never approached city officials to find out more. "I've been in this for 27 years, and I feel that I should be able to do what I want with my condo," she said. "I knew what I was going to have to sell it for. I know some people felt that it was only good for 20 years. I can't say whether I felt that or not. I never even talked to anybody at the city."

City officials can offer evidence of at least some past efforts to educate homeowners about condo restrictions. The Mayor's Office of Housing provided SF Weekly with a 1992 letter sent to Dee Modglin, one of the plaintiffs in the current lawsuit, which clearly outlines the resale restrictions to which she and others now object. Johnson, Modglin's lawyer, said the letter was written years after her client purchased her condo, and dismissed it as an example of the city "trying, very inartfully, to build a paper trail" to retroactively enforce its regulations.

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Peter Jamison

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