Proposed Legislation Requires Landlords to Subsidize Rents of Evicted Tenants for 2 Years

San Francisco Supervisors have been railing against the Ellis Act for some time now, without much success in cutting down the eviction rate. But Supervisor David Campos' latest piece of legislation aims better compensate victims of the often-abused state law that allows landlords to evict tenants by getting out of the rental business entirely.

Via a press release sent out this morning:

The ordinance will require landlords who evict using the Ellis Act to pay the difference between the tenant’s rental rate prior to eviction and what would have been the market rate for that unit for two years. This ensures that relocation payments adequately represent true market costs and allow displaced tenants who would face dramatically higher rent costs the opportunity to stay in San Francisco.

Currently, landlords are required to pay relocation assistance amounts of approximately $5,261 per tenant capped at $15,783 per unit. Landlords must also pay an additional amount of approximately $3,508 for each displaced elderly or disabled tenant. The Campos law would keep the current law as a minimum, but in most cases, would make relocation reflect market increases.

“Almost every renter in San Francisco is just one eviction notice away from being displaced from our city,” said Supervisor Campos. “It is time that we recognize that tenants must receive assistance that is commensurate with market increases in rent if we are to truly address our affordability crisis and check the rampant growth of Ellis Act evictions.”

Campos added that he's working with Sacramento on “placing an outright moratorium on Ellis Act evictions in San Francisco”—a goal we imagine won't gain much traction up-river—and he sees this as an interim solution.

Of course, the San Francisco Apartment Association has already come out against the plan, with Association director Janan New suggesting that the proposal is “just clear theft.”

“It is very creative - and he is acknowledging the ultimate policy goal of transferring wealth from building owners to tenants, so at least they are clear,” she told the Chronicle. “The issue we have is how do you establish a definition of what these criteria are? How do you define what a comparable unit is, what a comparable neighborhood is? How do you define current market rate?”

[SFGate]

Comments (29)

While it may be true to say the EFFECT of the proposed legislation is to “transfer wealth,” I think it’s more accurate to say that the policy goal is regulating/diminishing the booming housing market.

Can they make the law retroactive? Our landlord said he’ll Ellis Act the building before anything like this becomes law.

That is quite likely unconstitutional.

Nice! Seems like a fundamentally good idea. Not perfect, but definitely a step in the right direction. Thanks, Sup. Campos!

Another lame proposal that doesn’t quite go far enough. Landlords of evicted tenants should be paying the tenants full rent for the lifetime of the tenant. I don’t understand where they pulled out “two years” from? The landlords will be getting rich off of the displaced tenants homes for far more than “two years”.

Bottom line: existing tenants who have been in SF since 1989 or longer should not have to pay any rent increases. And, if you kick them out, Mr. Landlord? Expect to keep paying.

…existing tenants who have been in SF since 1989 or longer…

Wait, where did you get that number from? Oh… it’s right there in your username. Of course.

Bottom Line: I should have to pay 1989 prices for everything for the rest of my life.

I was planning to answer thoughtfully and maturely, but after I stopped laughing I realized you are completely crackballs so I won’t. And by the way, it’s Mrs. Landlord, thank you very much.

Forget about what the SFAA really thinks. The fact that their talking points do not express disagreement with the proposal, but ask how to define what comparable is, etc tells me so much about where we are politically today. I am surprised they didn’t go with the, “if this passes every landlord will just Ellis Act their tenant tomorrow before it goes into effect” line, so credit to them.

They know it will be rejected by the courts. Campos knows it too. He’s just politicking for the Assembly seat.

I’m not sure it would face legal hurdles. The Ellis Act permits municipalities to impose mitigation measures, and doesn’t specify limits on them. If the city can require $5k, there’s no apparent principle that would keep it from requiring $50k (which two years of making up the difference could easily equal).

I think a bigger problem isn’t a legal one, but a practical one. How the hell do you set up a bureaucracy to determine comparability? What kind of process would that follow? How long would it take? And so on.

The mitigation measures still can’t be unreasonably high - you couldn’t set the relocation costs to $1 million, for example. The question will be if this is considered reasonable.

The language of the statute doesn’t seem to demand reasonableness (though perhaps there could be some externally imposed requirement of it - the Cal. Constitution? Existing case law?):

Gov. Code sec. 7060.1 - nothing in this chapter …

(c) Diminishes or enhances any power in any public entity to mitigate any adverse impact on persons displaced by reason of the
withdrawal from rent or lease of any accommodations.

In any event, even if there were some sort of reasonableness review, I suspect that a million dollars might not survive it, but $50k might.

Given the history of much greater numbers of Ellis Act evictions in the late 90s/early 2000s, politicians must have already tried to increase the relocation fees. Does anyone know the history of the current relocation amount? In particular, why isn’t it higher?

Campos is such a pandering hack it’s ridiculous.

+1

The only way you’re going to build a stock housing that is protected from the whims of the market will be to build more public housing. If your argument is “we need to keep a subset of housing with stable prices for the stability of the community”, then ultimately the community should be the ones paying for its upkeep - it doesn’t make sense to demand individual landowners subsidize it on their own. Why should they?

So why is there seemingly less political interest in that solution? Is it because SF’s remaining white middle-class folk like rent-controlled apartments, but doesn’t like the thought of living in public housing? Or what?

I suspect it’s because of prop 13. The city can’t actually raise more revenue to pay for more public/subsidized housing, so they instead impose fees on developers and landlords because it doesn’t require the voters approving a tax increase by ⅔.

I’m skeptical. Even if prop 13 is a burden, the fact remains that a whole lot of pricey SF real estate changed hands over the past couple of years. The people holding those places aren’t paying 1980s property tax values anymore. Property tax revenue is up by something like 30% over the past five years. The money would be there if the will was.

The renter majority of this city keep pushing laws that make being a landlord increasingly unattractive and then, without fail, continue to be surprised and outraged when the outcomes have negative repercussions for renters as well. Then another an even more punitive law, then another negative repercussion, rinse and repeat.
This cycle will continue until we move on from the view that renters and landlords are locked in this zero sum game.

So apparently being a landlord in this city is increasingly unattractive and the result of this is … higher rents, which sounds great to me as a landlord.

It definitely works well for landlords who know how to pick tenants that won’t stick around too long. I hear that ambitious, young techies are usually the best bet.

You must be aware that the vast majority of San Franciscans pay only a nominally higher amount of rent each year, hence most rents are really not increasing. Rent control pegs increases below inflation meaning that with every passing year the gap between rent received and costs of operation gets narrower and narrower. A landlord has to hedge their bet by making their profit margin as high as possible in Year 1 knowing that with each passing year profit will diminish, and perhaps even turn to a money losing proposition, as it has for so many with long-term tenants. This is why rents on new units are so high and why so many landlords are choosing to get out of a business that is increasingly being made more difficult and unprofitable by a vindictive electorate. San Francisco renters got the exact system they shortsightedly asked for.

Hooey. This is the same old long-discredited argument against rent control. *yawn* Just look at what happened to rents anywhere that rent control has been repealed, for instance Cambridge, and you can see that repeal of rent control doesn’t result in rents going down, or even in the rate of rent inflation decreasing… rather you just end up displacing people who were relying on rent control to be able to stay in the city.

You may not like the facts, but that doesn’t change them. That’s the neat thing about facts, they exist whether or not you want them to.

The question of what rent control does to rent is too complicated to be settled by one case study (which involved different laws than SF’s). What it definitely doesn’t refute, however, is the argument that adding stricter rent controls makes being a landlord less attractive. Yet tenant activists demand stricter controls and then bemoan the shrinking number of apartments available in the city as they’re converted and sold, somehow never quite making the connection between the two.

You think that repealing the Ellis Act, for example, wouldn’t inspire some landlords to get out and pull apartments from the market as quickly as they can? Once it’s gone, they can never choose not to be landlords again, except under rare circumstances. I don’t like to see people get evicted, but if I had a place that I could rent, I might do it if it would be rent-controlled - but I _definitely_ wouldn’t do it if I knew I could never again choose to stop doing it. (Unless I managed to sell it, of course - which would be more difficult when I’d need to find someone who specifically wanted to be a landlord and keep renting it.) It’s not hard to understand.

Here comes another fight between a rent control parasite and a landlord parasite.

Naw, I don’t live in a rent-controlled property. I just recognize the reality that they are a positive force for helping keep people from being priced out of the city.

I’m not a landlord (parasitic or otherwise) and agree with the basic tenets of rent control, but given the illogical and vengeful environment out there I could see renting my place out one day being financially ruinous.

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