Photo by Mike Nemeth
Sen. Mark Leno glances at a witness during the Assembly committee hearing where SB 1439 died.
A San Francisco law unconstitutionally forces landlords to pay exorbitant fees before they can remove a property from the rental market, according to a lawsuit filed by a chapter of the California Apartment Association and other plaintiffs.
The lawsuit, filed in federal court Thursday, July 24, challenges a San Francisco ordinance enacted in June that takes aim at landlords using the Ellis Act to quit the apartment business.
The Relocation Assistance Payment Ordinance requires that landlords pay tenants the difference, over a two-year period, between what they were paying for an Ellised apartment and the market rate for a comparable apartment in The City.
The Pacific Legal Foundation in Sacramento is representing the plaintiffs, including Park Lane Associates, which the ordinance would force to pay about $1.45 million to 15 tenants. Other plaintiffs include the San Francisco Apartment Association, a chapter of CAA; the Coalition for Better Housing, and Daniel and Maria Levin. Under the ordinance, the Levins would have to pay their tenant nearly $118,000 to gain use of the bottom floor of their home.
“We do not want to be in the rental business,” Dan Levin said in this press release from the Pacific Legal Foundation. “We want the lower unit for our own use. We want privacy. We want to be able to have family and friends stay with us occasionally. But the city is making this impossible.”
www.youtube.com/embed/6Hxb49h1-Uc
The lawsuit against San Francisco, among other things, seeks to stop the city from enforcing the ordinance, which violates both the U.S. Constitution and the Ellis Act.
“The city is essentially forcing people to become permanent landlords, by making it wildly expensive to withdraw a unit from the rental market and take possession of their own property,” said J. David Breemer, principal attorney at the Pacific Legal Foundation. “This has nothing to do with ‘relocation assistance,’ because the money that people like the Levins are required to pay to their tenants doesn’t have to be used for relocation. It can be used for anything.”
The Ellis Act, passed in 1985, bars local governments from making property owners stay in the apartment business.
Before the law, rent-controlled cities — Santa Monica in particular — were forcing landlords to stay in business, even if they were losing money or experiencing other hardships. The Ellis Act has blocked this type of government intrusion, providing a veritable escape hatch for owners who can no longer thrive – or even survive — in rent-controlled communities.
The San Francisco ordinance fought in the lawsuit represents one of several attacks on the Ellis Act this year and was enacted as CAA seized a victory for property owners in the Legislature.
Last month, Sen. Mark Leno’s SB 1439 died in the Assembly. The bill would have forced many San Francisco rental property owners to wait at least five years before removing their units from the market — even if losing money month after month.
Media coverage of lawsuit
- San Francisco landlords sue to stop ‘oppressive’ renter relocation payments (San Francisco Business Times)
- San Francisco Landlords Sue City Over Increased Ellis Act Relocation Fees (CBS KPIX)
- Landlords challenge S.F.’s new law on evictions (SFGate)