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How sorry should we feel for these people? Even if their homes are worth a few hundred thousand dollars less than they would like, the condo owners now suing the city are hardly among San Francisco's most desperate residents. Like the beneficiaries of any other government program, some might be trying to game the system. And there's little doubt that those honestly confused about their ownership rights were ill-served, as Shoemaker suggests, by a lack of financial savvy.
Nevertheless, Cincotta, the former housing director on whose watch the program began, thinks something went wrong here. The initial premise of the BMR Condo Conversion Program, he said, had nothing to do with creating permanently affordable homes. While it was one of the first nationwide to resemble the now-common practice of inclusionary zoning — whereby developers agree to set aside a fraction of units in new residential projects as permanently below-market-rate housing — Cincotta recalls that the BMR condo program had more modest and immediate goals.
"I think that's one of the things that's been missed," he said. "The big crisis was gentrification. ... I think our focus at that time was the focus of minimizing displacement, for that particular time, for that particular person. We had less concern about keeping it affordable permanently."
Rather than setting up punitively high buyout fees, Cincotta said, a more enlightened approach to modernizing the program would have been to modify the terms of the agreement between owners and the city along a "shared equity" model. Such programs already exist in San Francisco: Owners and the city share proportionally in the increase or decrease in a home's market value, according to their original levels of investment or subsidy.
"If either city or home-owner puts $75,000 into a property, that amount should increase or decrease as the value of the property increases or decreases," Cincotta said. "To me, that system is more equitable. The way the city system is now, the lower-income household is taking all the risk, and I think that's the problem."
Sitting with Phyllis Lund on a recent afternoon in front of her Goldmine Hill condo's gas fireplace, it does seem odd that this small corner of the world she has made her own should rest, after nearly 20 years, in the control of bureaucrats. Lund said she knew that her studio was a below-market-rate unit when she bought it for $96,000 — "I thought it was just a break for first-time homebuyers," she said — but was never informed of future restrictions: "I've kept every single paper. Nowhere did I have anything."
Ironically, Lund said, back in 1992 she considered buying a market-rate studio in the same neighborhood that cost only about $8,000 more, a pittance when spread out over the lifetime of a mortgage. But she preferred the layout of her Goldmine Hill condo, and as a result now essentially has $100,000 less than she would have if she had bought the comparable studio up the street.
Not that the question is just about dollars and cents. For Lund, who opted not to get involved in the lawsuit, there's something more personal involved here. Something about government skating from its responsibilities to those it claims to help, an impression that she and others like her are paying the price for an embarrassing saga of bureaucratic failure. "It's as if I'm the caretaker for the Mayor's Office of Housing for not doing their job," she said.
