As in past years, 200 units will be selected for conversion in the 2010 condominium conversion lottery. Each of these buildings must contain no more than six residential units and meet certain owner occupancy and eviction history requirements.
San Francisco's condo lottery system is designed to favor buildings that have previously lost. The first 100 winning units are selected from among applicant buildings which have lost the lottery at least three times ("Pool A"). Buildings are not eligible to participate in Pool A unless the owners can swear that no elderly (over 60 who has resided in the building for 10 years), disabled or catastrophically ill person was evicted from the building since January 1, 1999. Eligible buildings are grouped according to the number of years they have entered. Buildings that have previously entered and lost six times are considered "Class 6", buildings that have entered and lost five times are considered "Class 5", and so forth. If the number of apartments in the most senior Class is less than 100, all of the buildings in that Class will automatically qualify for conversion. The unused Pool A places are then available for the next most senior Class. For example, if the total number of apartments in the senior Class is 32, 68 places will be available for the next Class. When the number of apartments in a particular Class exceeds the number of places remaining in Pool A, a lottery drawing will select the winning buildings from that Class.
Buildings that do not qualify for, or are unsuccessful in, Pool A are eligible to participate in "Pool B" from which the remaining 100 units will be selected for conversion. Each Pool B entrant gets a number of tickets equal to the number of times it has participated in the condominium lottery. For example, a first-time lottery entrant gets one Pool B ticket while a fifth-time entrant gets five. Buildings from which an elderly, disabled or catastrophically ill tenant was evicted after November 16, 2004 are eligible for only 25 of the spaces in Pool B.
In practice, this system has produced fairer results than the prior one, but overall the chances of winning are poor and diminishing from year to year. In both 2006 and 2007, all of the sixth-time entrants were automatically selected (there were no buildings in for the seventh or more time in either year), but in 2008 sixth-time entrants had a statistical likelihood of 92.05%, and in 2009 sixth-time entrants had a statistical likelihood of 46.38%. All of those on their fifth or fewer entrance were shut out of Pool A altogether, and there were so many tickets in Pool B that the having extras (due to seniority) did not make a significant statistical difference. The 2009 lottery results indicate that the differences among the first through fifth-year entrants were the result of chance rather than seniority: 5.63% of fifth-year entrants won, compared with 12.04% of fourth-year entrants, 2.80% of third-year entrants, 4.35% of the second-year entrants, and 2.16% of the first-year entrants.
In the 2010 condominium conversion lottery, for the first time, there will be a significant number of seventh-time entrants and their statistical odds of winning are projected at 90%. The 2010 sixth-time entrants are expected to be shut out of Pool A altogether, lowering their statistical odds to about 2%. Each of the other classes will have slightly lower odds but, again, the difference in odds between first-time entrants and sixth-time entrants will not be statistically significant.
Winning buildings must submit a conversion application by a summer deadline. Under the present system an additional 20 buildings are picked at the time of the lottery to go on a standby list in case winners fail to submit applications or are rejected for failure to qualify.
Historically, and according to the written law, lottery priority has required that one of the qualifying owner-occupants has been an owner (but not necessarily an occupant) during each of the previous lottery losses. But DPW has decided to require that at least one person have been an owner and an occupant for each year for which priority credit is given. Our office plans to oppose the imposition of this new requirements, and is engaged in a dialogue with the City on the issue. If you or anyone you know is denied lottery priority based on this DPW policy, please contact us.
ABOUT THE AUTHOR
Sirkin & Associates has been guiding clients through San Francisco condominium conversions and subdivisions for almost 20 years, and have completed more SF conversions than any other firm. Over the years, we have been involved in drafting many of the laws that govern SF condominium conversions, and have helped develop many of the procedures used by the San Francisco Department of Public Works (“DPW”) Bureau of Street Use and Mapping (“BSM”). Our breadth of experience makes it likely that if a glitch appears in the condominium conversion process, we will have seen something similar before and know exactly what to do. And for those rare occasions when a completely new issue arises, we are the recognized masters at developing creative solutions that save our clients time and money.
Experience has taught us that the most important things to our clients are the immediate availability of staff to answer client questions and diligence in following the process of governmental approval. To ensure we achieve these goals, we have a full-time paralegal, Cam Perridge, devoted to client contact, preparation of subdivision applications, and monitoring subdivision approvals. Cam maintains a direct-access telephone line and can be reached easily any weekday to discuss the status of a conversion or subdivision process. And for those occasions when you need to speak with an attorney, Andy Sirkin is committed to being available to you when you call or within the next 24 hours. Andy is known for his diligence in calling clients back quickly, and is more committed than ever to being easily reached.
But while processing the condominium conversion or subdivision quickly and efficiently may be our client’s most immediate priority, the governing documents (the Declaration of Covenants, Conditions and Restrictions, or “CC&Rs” supplemented in some cases by Bylaws and/or Articles) will have much greater long-term impact. The quality of the governing documents will directly affect the quality of life of the owners, as well as their ability to refinance and sell. Andy Sirkin has been co-author of the past 10 editions of The Condominium Bluebook, and his expertise in preparing condominium governing documents is recognized throughout California. Sirkin & Associates governing documents continue to be the ones other firms emulate, and Realtors, lenders and buyers strongly prefer. This leadership results from constant improvement and innovation that makes our documents easier to read and understand, as well as more efficient and less expensive to enforce.
Before you choose a lawyer to handle you condo conversion or new construction subdivision, take a moment to speak with Cam, Andy, or attorney Rosemarie MacGuiness, at Sirkin & Associates. Our practice includes all required City and State applications and filings, as well as preparation of any governing documents you may need. We offer these services on a flat-fee basis, and our rates are generally lower than those of other firms.
