SEC. 1396.1. ANNUAL CONVERSION LIMITATION LOTTERY PROCEDURES.
§ 1396.1
This section establishes the lottery procedure for converting rental units to condominiums under Section 1396, dividing eligible buildings into two pools with different selection rules: Pool A prioritizes buildings that have repeatedly failed previous lotteries (up to 100 units), while Pool B includes all other eligible buildings and unsuccessful Pool A applicants, with bonus lottery tickets awarded for past participation and failed selections.
San Francisco runs a lottery to decide which apartment buildings can convert to condos. The lottery has two groups (Pool A and Pool B). Pool A gives priority to buildings that have entered the lottery multiple times without winning—if Pool A buildings total 100 units or fewer, they all automatically get approved; if more than 100 units, the city runs a separate lottery for Pool A. Pool B includes all other eligible buildings, plus any Pool A buildings that didn't win. Buildings in Pool B get extra lottery tickets based on how many past lotteries they entered without being selected—one ticket for this year, plus bonus tickets (up to five total) for previous failed attempts. The city may also require proof that the building hasn't evicted senior, disabled, or catastrophically ill tenants since 2004. Buildings not selected are placed on a standby list in case others drop out.
- Complex:The section involves multiple interconnected pools, eligibility criteria spanning 1990–2004 with different rules for different periods, and intricate ticket-counting rules that are difficult to follow without careful re-reading.
- Controversial:The requirement to certify no wrongful evictions of vulnerable tenants since 2004, combined with enforcement powers under Section 1304, involves politically sensitive tenant-protection enforcement that San Francisco residents publicly debate.
AI-generated · claude-haiku-4-5 · informational only, not legal advice.
Official text
This Section shall govern conduct of the lottery required by Section 1396 for the conversion of residential units.
(a) The lottery shall be comprised of two pools (Pool A and Pool B).
(b) Pool A.
(1) For the 1995 lottery, Pool A shall consist only of those eligible buildings which participated but which failed to be selected in any previous lottery held during the years 1990 through 1994. For the 1996 lottery, Pool A shall consist of only those eligible buildings which participated but failed to be selected in any lottery held during the years 1990 through 1994 and the 1995 lottery. For all subsequent lotteries after 1996, Pool A shall consist of only those eligible buildings which participated but which have failed to be selected for conversion in at least three previous lotteries, two of which must be lotteries held after 1994. If all buildings eligible in Pool A comprise 100 or fewer units, all such buildings shall automatically be approved for conversion. Any unallocated units in Pool A shall be added to Pool B.
(2) If all buildings eligible in Pool A comprise more than 100 units, the Director of the Department of Public Works (Director) shall conduct a lottery among the buildings eligible for Pool A so that no more than 100 units are selected for conversion in Pool A. All buildings not selected for conversion through the Pool A lottery shall then participate in Pool B, under the procedures set forth below.
(c) Pool B.
(1) Pool B shall consist of all eligible buildings pursuant to Section 1396 above, together with any buildings from Pool A that were not selected for conversion in the Pool A lottery.
(2) Buildings from Pool B shall be selected for conversion by random selection of lottery tickets submitted for eligible buildings.
(3) Each building in Pool B shall receive one lottery ticket for the current lottery, plus a maximum of one lottery ticket for any and all lotteries held during the years 1990 through 1994 in which the building participated but failed to be selected for conversion in the lottery, plus one lottery ticket for every lottery after 1994 in which the building participated but failed to be selected for conversion.
(4) No building in Pool B shall receive more than five tickets.
(d) Applicants shall provide proof of participation in past lotteries to the Director.
(1) Proof of participation in any lottery held during the years 1990 through 1994 shall be as follows:
(i) Presentation by the registrant of a letter of regret from the Director for any lottery held during the years 1990 through 1994; or
(ii) Presentation by the registrant of a cancelled check for payment of lottery registration fees from any lottery held during the years 1990 through 1994; or
(iii) Any other proof of participation in any lottery held during the years 1990 through 1994, as determined acceptable by the Director.
(2) Proof of participation in any lottery held in or after 1995 shall be determined upon presentation by the registrant of a letter of regret from the Director.
(e) Commencing with the 1997 lottery, any building seeking more than one lottery ticket shall demonstrate to the satisfaction of the Director that one or more of the qualified owners of the building were owners of the building at the time of the lotteries in which the building participated but failed to be selected for conversion.
(f) For purposes of determining whether a building failed to be selected for conversion in a previous lottery:
(1) Those buildings which were chosen in a previous lottery but were not converted for any reason whatsoever shall not be considered as having failed to be selected in that lottery.
(2) Any previous failures to be selected by lottery do not have to occur in consecutive years.
(3) No credit shall be given for any year in which the building did not participate in the lottery.
(g) In addition to the other provisions relating to Pool A and Pool B described in subsections (b) through (f) above:
(1) the first 175 units selected by lottery in Pools A and B must meet the following requirements: the Applicant for the lottery must certify under penalty of perjury and the Department must verify with the Rent Stabilization and Arbitration Board, and with the Human Rights Commission as applicable, that since November 16, 2004, no eviction as defined in San Francisco Administrative Code Section 37.9(a)(8) – (14) of a senior, disabled person, or catastrophically ill tenant as defined below has occurred, or if an eviction has taken place under Administrative Code Section 37.9(a)(11) or (14), that the original tenant reoccupied the unit after a temporary eviction. For purposes of this section a "senior" shall be a person who is 60 years or older and has been residing in the unit for 10 years or more at the time of the lottery; a "disabled" tenant is defined for purposes of this Section as a person who is disabled within the meaning of Title 42 U.S.C. Section 12102(2)(A); and a "catastrophically ill" tenant is defined for purposes of this Subsection as a person who is disabled as defined above, and who is suffering from a life threatening illness as certified by his or her primary care physician.
(2) If there are not 175 units that meet the requirements of subsection (g)(1) above, then the remaining units will not be awarded by lottery in that year's lottery or any future lottery. If there are more than 175 units that meet the requirements of subsection (g)(1) above, then those units may compete for the remaining 25 units as described in subsection (g)(3) below.
(3) The remaining 25 units in Pool A and Pool B will be selected as described in subsections (b) through (f) and may, but do not need to, meet the additional requirements of subsection (g)(1) above.
(4) If the Department determines that an Applicant has knowingly provided false material information under subsection (g)(1) above, the Department shall immediately deny the application for the lottery, or if the Applicant has submitted an application for conversion, shall immediately deny the application for conversion. Moreover, the Department, the Director or other authorized person or entity may also enforce the provisions of this Section under Section 1304 or any other applicable provision of law as warranted.
(h) Standby List.
(1) Once all units have been allocated in Pools A and B, the Department shall place the remaining buildings on a standby list as set forth in Subsection (2). Buildings on the standby list may convert if selected units in Pools A and B are unable to convert within the time limits that the Department establishes and as long as the maximum number of allocated units is not exceeded.
(2) The Department shall determine the standby list by random selection in a lottery; provided, however, that only buildings satisfying the requirements of subsection (g)(1) shall participate in the lottery authorized under this Subsection. The standby list lottery shall terminate after the Department selects the first 20 buildings.
(3) All remaining buildings shall be kept on file with the Department. These buildings are eligible to convert if selected units in Pools A and B and the standby list lottery are unable to convert within the time limits that the Department establishes and as long as the maximum number of allocated units is not exceeded. In such an event, the Department shall conduct a random selection lottery among the remaining buildings for any unallocated units.
(Added by Ord. 428-94, App. 12/23/94; amended by Ord. 161-01, File No. 010891, App. 7/9/2001; Ord. 281-04, File No. 041353, App. 12/1/2004; Ord. 281-05, File No. 051462, App. 12/21/2005; Ord. 6-07, File No. 061519, App. 1/18/2007)