A lawsuit against the city highlights an affordable-housing program's decades of mismanagement — and the middle-class homeowners who lost out as a result.

"Statistically, only 25 percent of residents of San Francisco are owners of their homes. That's the lowest in the country, next to Manhattan," said Tracy Parent, a board member of the San Francisco Community Land Trust who supports maintaining restrictions on the BMR condos. "Our city is very small, and the demand will always be higher than the supply. It's very important to use our public resources to preserve the affordable homeownership opportunities that have been created."

There is also reason to question whether all those involved in the lawsuit against the city have an equally strong case. Plaintiff Nancy Trogman told SF Weekly that she knew about restrictions on her condo over the years, but only vaguely, and never approached city officials to find out more. "I've been in this for 27 years, and I feel that I should be able to do what I want with my condo," she said. "I knew what I was going to have to sell it for. I know some people felt that it was only good for 20 years. I can't say whether I felt that or not. I never even talked to anybody at the city."

City officials can offer evidence of at least some past efforts to educate homeowners about condo restrictions. The Mayor's Office of Housing provided SF Weekly with a 1992 letter sent to Dee Modglin, one of the plaintiffs in the current lawsuit, which clearly outlines the resale restrictions to which she and others now object. Johnson, Modglin's lawyer, said the letter was written years after her client purchased her condo, and dismissed it as an example of the city "trying, very inartfully, to build a paper trail" to retroactively enforce its regulations.

A condominium building at Goldmine Hill, a residential complex in Diamond Heights where many homeowners are suing the Mayor’s Office of Housing.
Frank Gaglione
A condominium building at Goldmine Hill, a residential complex in Diamond Heights where many homeowners are suing the Mayor’s Office of Housing.

Many homeowners cite Lu in particular as the source of their assumption about condo sale restrictions. According to Myrna Melgar, director of homeownership programs at the Mayor's Office of Housing, Lu cried after being confronted with these assertions. She has also apparently denied them. "There's a lot of 'Jeanne Lu said this, Jeanne Lu said that.' Jeanne said she didn't, so that's it," Shoemaker said.

In the end, Shoemaker said, no one has been able to produce a record of misinformation convincing enough for the city to simply abandon its claim on more than 500 affordable homes.

"We've never had a document produced that speaks to this issue of why people thought there was a time limit on their ownership rights, and that's really been the central narrative of the whole debate," he said. "Ultimately, real estate is a very legalistic, written culture. It's not so much what our office said. People who knew each other provided information to each other in an oral culture that kind of became the truth. Most of us would expect to get things in writing."

Including judges. From a legal standpoint, experts say, the condo owners' argument is a long shot. Even Johnson acknowledges that she has uncovered no particularly damning document from the city: "We're aware of no smoking gun, per se." And the idea that government at any level should be held responsible for misinformation delivered by its employees is one that courts have been loath to embrace. As any law student can tell you, a major principle of American jurisprudence is that everybody is presumed to know the law — Ignorantia juris non excusat.

"The courts are, in general, reluctant to probe deeply into allegations that government officials told people not to comply with a law, because it's such a dangerous area to get into," said John Leshy, a property law professor at UC Hastings College of the Law. "It would turn every conversation with a government official into a lawsuit."

Recognizing the mess the city had made, the Mayor's Office of Housing last year set out to clarify and codify, once and for all, the restrictions on ownership rights that had been subject to so many conflicting claims. The timing of this effort was no accident. Increasingly confused homeowners had begun asking for details on the rules governing their condos — and the purported 20-year sunset on resale restrictions was nearing for those who had bought condos in the 1980s.

The restrictions that the Mayor's Office established — or merely clarified, as the city would have it — were almost uniformly objectionable to many homeowners in the program. Renting was forbidden. (A grandfather clause was established, allowing those already renting out their properties to continue doing so for a period of several years; in offering this option, Shoemaker acknowledged that his office had misled condo owners by telling them it was okay to rent the units, which were supposed to be owner-occupied.) Those who renovated or in any way fixed up their units were given limits on how much of the cost could be included in the resale price. The legislation also designated the condos as permanently affordable housing, with accompanying restrictions on the properties' price and the income level of those who could inherit them — and no acknowledgment of any limit, of 20 years or otherwise, on resale restrictions.

Perhaps most controversial was an aspect of the ordinance that the Mayor's Office had billed as a concession: A buyout option was offered to those who had purchased BMR condos in the particularly chaotic days before 1992. This was the year that city officials began circulating an affidavit alerting new BMR condo buyers to restrictions on their units, though there are questions about who actually received it and whether it stated the guidelines accurately.

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