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The Decline of the Middle Class - Part II

By Jordanna Thigpen

May 5, 2006

Several weeks ago, I wrote about union membership and how it is essential to maintaining the middle class in this country.

It is my belief that our society needs economic diversity to succeed. To have a robust economy, we must have workers of all ages and ability, all income and education levels, and all interests. A robust economy will ensure that our city can succeed in the coming century. Unfortunately, the balkanization of the very rich and the very poor - an economic trend developing across America - is becoming increasingly apparent right here in San Francisco.

Electeds must remember that the middle class is essential to the future of this City. We must have some leadership to protect the middle class - the class of small business; the class of educators; police, fire, and other union members; the class of the vast majority of solo practitioners in every profession; the class of the vast majority of American society.

The latest condo conversion bill, offered by Supervisor Peskin, does not protect the middle class. Instead it unfairly penalizes those who seek to commit to San Francisco through home ownership. In fact, the repeated attempt to make home ownership impossible is an assault on the middle class in San Francisco - the class most likely to vote, incidentally.

Faced with a 30% approval rating, a Board desperate for a new lease on life will likely support Supervisor Peskin's condo-conversion bill next Tuesday, in the hopes that certain factions will drum up support for certain candidates in certain elections this year and next.

Supervisor Aaron Peskin has introduced a ban on condo conversions in a variety of situations, including any building where Ellis Act or OMI evictions resulted in the displacement of two units or more - regardless of the age, income, health or socio-economic status of the displaced tenants. Ostensibly, the proposal is aimed at protecting low-income, senior, and disabled individuals from eviction.

This condo conversion bill has no provision for situations where wealthy tenants are evicted to make room for owners with lower incomes. Possibly the worst provision of this proposal is the ex post facto clause - retroactivity to 1999. Ex post facto clauses are rarely included in statutes, for good reason. Some theorize that by making this condo conversion bill as extreme as possible, Supervisor Peskin can then "negotiate" from there in "good faith."

The argument in favor of the bill is that we are facing an "evictions crisis." Examining statistics reported by the SF Rent Board from 1996 to 2005 demonstrates the relationship between Owner Move-Ins (OMIs) and Ellis Act evictions. In 1996 there were zero Ellis Act evictions. The number of Ellis evictions then spiked in 2000 at 440, during the height of the Dot Com era - but no one can seriously attribute any statistical normalcy to anything that occurred in the City during that period. Last year there were 330 Ellis evictions in San Francisco. By contrast, OMIs have declined since 1998, when they peaked at 1440. In 1999 a ballot measure passed restricting OMIs - so owners resorted once more to Ellis evictions, which dropped to a low of 83 in 2002 but have increased every year since then.

Supervisor Peskin's condo-conversion bill attempts, in theory, to rectify the steady increase of Ellis Act evictions. Why have Ellis Act evictions increased? Seen in the worst light, it's because of satanic landlords who seek to cruelly evict elderly, disabled, or health-challenged tenants for pure profiteering. And no doubt, some of the Ellis evictions that occurred last year fall under the profiteering category. There will always be individuals who are greedy, immoral, and despicable. Count on it!

But what about the rest? The Ellis Act is about one thing: the landlord's right to go out of business. An owner of a flat has a right to move back into it. He pays the mortgage. He takes the risk of owning. He maintains the property. He owns the property.

Tenants are protected in San Francisco through rent control - which could probably stand to be strengthened by extending it to post-1979 construction - and through payments which tenants are entitled to in the event of certain evictions. In fact, the 1st District Court of Appeal just upheld higher payments in the event of an OMI - another Peskin proposal which passed and was immediately challenged in the SF Superior Court. Likely, the fate of this condo conversion bill, if it passes, will be another lengthy, expensive court battle - which will expend city resources that could be going to human services. Is that "progressive"? Real progressives facilitate progress, not an endless cycle of paperwork for Fox Plaza.

The City already tried to ban TICs once - and this was rightfully declared unconstitutional by the courts in 2002. If the condo conversion bill passes, TICs will become the only choice for potential homeowners. The market, and the financial institutions, will follow suit. There is already a new loan product for financing TICs, to take some of the risk out of the situation.

The Board grossly underestimates the middle class determination to become more prosperous and provide a home for one's family. It is bourgeois? Of course, and it's not unconscionable. That's what being middle class means: providing stability, economic growth and vitality, and investment in the community, in part through home ownership. The middle class is an important and necessary part of the San Francisco economy.

Some people will never own a home in their lives. And for some people, economically, it doesn't make sense. But for the vast, silent majority - the majority that does not have the time or inclination to attend six hours of public comment and make their presence and their economic power known - home ownership is the final, logical manifestation of the American Dream. It is a dream that will not be deferred.

District 6 resident Jordanna Thigpen is an attorney, small business owner and President of the San Francisco Small Business Commission. You can usually find her at work and she doesn't get to Ocean Beach often enough. Email Jordanna at jgthigpen@gmail.com.




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