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Condo conversions supply affordable housing for the city of San Diego

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Home ownership provides enormous fiscal and social benefits to both the residents and the City of San Diego.

However, according to the 2000 Census, less than 50 percent of the residents in San Diego can afford to purchase their own home.

One form of development that helps alleviate this issue, especially for first time homebuyers, is the conversion of apartment buildings to condominiums.

The conversion of apartment buildings to condominiums is simply a transfer of ownership from one owner or group of owners to another owner. These new owners are entitled to the exclusive use of their individual condominium units as well as the right to use the common areas of the complex.

"Three-quarters of all (condo conversion) buyers were first-timers who had lived in San Diego County for an average of 15 years," according to Alan Nevin's article in the San Diego Metro titled "Celebrating Conversions." Nevin went on to write that "92 percent of the buyers were either somewhat satisfied or very satisfied with their new home."

Condo conversions in San Diego provide the only truly affordable, first-time home ownership opportunity for most families.

However, due to unfavorable economic conditions relatively few apartment buildings have been built in the last 20 years resulting in a shortage of high quality apartments for conversion. These older buildings were built pursuant to the building codes in place at the time of construction, economics and market demand.

Furthermore, the older apartment buildings have received varying degrees of routine maintenance and capital improvements. In addition, in areas where lower than average rents were achievable, many owners only performed the bare minimum of repairs.

To achieve improvement of the existing affordable housing stock without sacrificing supply and first time homebuyer opportunities, we recommend the following steps be taken.

First, we recommend that every building over six years old considered for conversion supply as part of their submission to the city a Property Facilities report completed by a licensed structural engineer.

If any integral component has a remaining useful life of less than five years, it should be replaced. Plumbing, heating, electrical, and roofing systems should be proven safe and in good operating condition.

Second, the developer/converter should supply a detailed list of intended improvements to the property. Improvements should be made that are adequate and appropriate to each unit, such as improvements to support new appliances. Plumbing systems should be adequate for further improvements to be made such as washer and dryer units. One hour rated fire walls should be installed between adjoining units. The developer should also supply the city with elevations of all sides of the property, clearly showing the existing improvements with scaled architectural drawings.

In addition, these drawings should show the buildings with the proposed structural and cosmetic improvements. All prospective condo purchasers should be given a copy of the structural engineer's report and a copy of the drawings showing the proposed improvements to the property. As one example, the city of El Cajon has been very successful in implementing these requirements.

Third, with regard to tenant relocation assistance, the current low-income based requirement system is, at best, difficult to manage. Our recommendation for relocation assistance is as follows.

All of the tenants who reside in the apartment building at the time of the 180 day notices to convert are served, and who remain in good standing until the time the 60 day notice to vacate is served, should receive two month's of equivalent rent money as relocation assistance.

Fourth, we feel as though the current "in lieu" provisions of inclusionary housing should remain unchanged. However, all tenants should be given a current "relocation assistance" package and contact information to the San Diego Housing commission, in addition to information about private affordable housing assistance.

Home ownership builds stable communities with committed and involved families. Clearly there is a need to increase the supply of affordable housing for the betterment of the community here in San Diego.

A real and practical solution to this need is the conversion of apartment buildings to condominiums. Given the number of conversions purchased by first time homebuyers and their satisfaction level in doing so, this option is not only practical but favorable as well. We truly hope you'll consider these factors and suggestions when developing a long-term strategy for the city.

Commercial Real Estate Association (CRA) has communicated this information to the San Diego City Council and Planning Commission in hopes that they will maintain this important supply of affordable housing for our region.

Haulley is vice president at GVA IPC Commercial and serves as president of Commercial Realtors Association. Taylor is senior vice president at Sperry Van Ness and serves as President-Elect of Commercial Realtors Association.

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