Opponents say it’s a get-rich-quick scheme for landlords
Santa Monica voters will be asked to decide in the upcoming election whether it’s a good idea renters are allowed to buy their apartments and turn them into condominiums.
Bright yellow signs proclaiming “Own your apartment” are springing up in front lawns of apartment complexes across the city, advertising the Santa Monica Resident Protection and Home ownership Charter Amendment, or SMRPH.
The proposal, known as Measure II on the Nov. 5 ballot, would allow a landlord to convert an apartment complex into condominiums if two-thirds of the tenants vote to buy their units for a pre-negotiated price. Any residents that don’t want to buy, are given a 99-year lease with full rent control protections.
The measure also would guarantee that homeowners could rebuild their homes after a disaster such as a fire, flood or earthquake, regardless of any recent zoning code changes prohibiting such a structure.
SMRPH supporters say the measure will help re-enforce the sense of community in Santa Monica, where the majority of residents rent and stay for only two years, on average.
“Santa Monica has very few ownership opportunities for middle -income residents and two-thirds of the units are rental properties,” said Paul DeSantis, a local real estate attorney who helped write the referendum. “If you have conversion, it’s going to allow for more people to make their homes here.”
Opponents of the measure say it’s nothing less than a get-rich-quick scheme for landlords. They say the measure was written behind closed doors by realtors —who would largely profit from the measure passing — with no input from tenants.
Councilman Ken Genser said the measure tricks tenants into believing they would be protected under a provision giving them a 99-year lease on their apartment even if they choose not to buy.
However, that protection would not become available until the property is approved to be converted into condominiums, which Genser said takes roughly two years to complete. During that time, landlords could harass tenants into leaving so they could later sell those units at a greater profit.
“It’s full of land mines for tenants,” he said.
Genser also points out that Santa Monica allowed property owners to completely restore their properties to their original state after the 1994 Northridge Earthquake, and he said it’s likely the city would do the same after future disasters.
DeSantis admits that there is a strong profit motive for landlords to convert their apartments into condos, but there is also just as strong a motive for renters to buy their units. Tenants could then take advantage of special home ownership tax breaks and benefit as their property value accrue.
“Nobody is going to be in business unless they can make money,” he said. “Under the conversion, both sides are going to make money.
638,“I know many tenants who have made tons of money buying their units,” he said. “And there’s nothing wrong with that. God bless them.”
Santa Monica adopted a program in 1984 called the Tenant Ownership Rights Charter Amendment — also known as TORCA — which allowed landlords to sell their properties to tenant groups. Occupants of the apartments were given an option of either buying the unit or remaining a renter.
But some elected officials found the program fraught with abuses. They said many tenants were kicked out of their apartments, which were then sold off at a huge profit by their landlords. The program ended in 1996.
Under SMRPH, the main difference is that tenants would be able to begin negotiations for the property, unlike TORCA which only allowed the owner to begin negotiations, DeSantis said.
“Under TORCA, it was extremely difficult for tenants to buy their building because many owners wouldn’t sign the TORCA application,” DeSantis said. “Under SMRPH, the tenants, if they are in a binding contract to buy the building, can proceed without the owner’s signatures.”
But Genser said SMRPH stacks negotiating power in the corner of landlords, who can fill units with their friends to ensure a building is converted, or leave units empty to make it easier to achieve a two-thirds vote.
“Under TORCA, tenants had leverage to negotiate a deal that was fair,” Genser said. “In this there is no way for tenants to negotiate a fair deal.”
Originally published in the Santa Monica Daily Press print edition on October 15, 2002. Read the original PDF.