Ordinance balances San Francisco’s ‘compelling public interest to protect renters from financial devastation’ with the property rights of landlords, City Attorney contends
SAN FRANCISCO (July 28, 2014) — A recently enacted city ordinance to mitigate the potentially devastating financial impacts on tenants who are evicted under the state Ellis Act is well positioned to overcome a pair of legal challenges filed late last week, according to City Attorney Dennis Herrera and the measure’s primary sponsor, Supervisor David Campos.
The ordinance provides that when landlords make use of the Ellis Act to withdraw their residential units from the rental market, they must compensate the renters they evict with the difference between the tenant’s current rent and two years of rent at a comparable unit in San Francisco, as determined by the City Controller. If the difference is less than the per-tenant payment required under the city’s prior tenant relocation assistance law, then the higher payment applies. The new ordinance additionally creates two administrative appeals processes to protect small property owners from undue burdens. One avenue of appeal would enable property owners using the Ellis Act to challenge the Controller’s rent differential calculation; another would allow landlords to petition for relief from tenant relocation assistance payments when they can show evidence of financial hardship. Landlords are free to pursue both appeals.
“I’m confident that the arguments both legal attacks present are non-starters,” Herrera said. “My office was already successful in defending tenant relocation assistance payments in the 2006 Pieri decision, and courts have previously recognized that the Ellis Act allows for local authority to mitigate harms caused by tenant evictions. Our amended ordinance balances San Francisco’s compelling public interest to protect renters from financial devastation — including homelessness, in some cases — with the property rights of landlords. It creates administrative procedures that previously didn’t exist to make sure small property owners are protected from undue economic burdens, and it is well within San Francisco’s policy-making authority under existing law.”
“My legislation was carefully crafted to address the reality that rents have recently skyrocketed in San Francisco. In early 2014, the median rental list price for a two-bedroom apartment in San Francisco was $4,150 a month,” added Supervisor Campos. “Before passage of my ordinance, when a tenant was evicted under the Ellis Act, in the vast majority of cases, he or she was forced to leave the City. The average person and family in San Francisco cannot afford current market rates. The new relocation assistance amount gives tenants a fighting chance to continue living in the City so their children can continue learning in local schools and individuals can remain stable parts of their community. I am confident that legal precedent allowing legislators to mitigate adverse impacts of Ellis evictions include the right to craft legislation aimed at allowing tenants to continue living in the City they love.”
On Thursday, July 24, lawyers from the Pacific Legal Foundation, an arch-conservative public advocacy firm, filed suit in United States District Court in San Francisco to invalidate the law, which they allege violates the U.S. Constitution’s takings and due process clauses, and also violates the state Ellis Act itself. On the same day, veteran real estate litigator Andrew M. Zacks sued the city and six individual tenants in San Francisco Superior Court to strike down the law. Zacks’s lawsuit on behalf of two individual landlords and the Small Property Owners of San Francisco Institute contends that the ordinance is preempted by the Ellis Act and doomed by procedural defects.
The Pacific Legal Foundation is a familiar legal foe to the San Francisco City Attorney’s Office in terms of federal constitutional takings challenges to the city’s affordable housing policies. PLF spent twelve years suing San Francisco over its Hotel Conversion Ordinance, a 1981 law that prohibits owners of single room occupancy hotels, or SROs, from converting residential units into lodging for tourists unless steps are taken to address diminished housing stock. Ameliorative steps required by the HCO include: replacing the converted units through construction of an equal number of units for residents; rehabilitating an equal number of residential hotel units; or making an “in lieu payment” to the city to cover some construction costs for new units to replace those being converted. San Francisco finally won the case in a unanimous U.S. Supreme Court decision involving PLF’s bid to re-litigate in federal court issues it had already lost in California’s state courts. The case, San Remo Hotel v. City and County of San Francisco, was decided on June 20, 2005.
The newly filed cases are: Levin et al. v. City and County of San Francisco, U.S. District Court for the Northern District of California, San Francisco Division, filed July 24, 2014, case no. 150085; and Jacoby et al. v. City and County of San Francisco et al., San Francisco Superior Court, filed July 24, 2014, case no. CGC-14-540709. Additional information about the San Francisco City Attorney’s Office is available at: https://www.sfcityattorney.org/.
PDF of the Tenant Relocation Assistance Legal Challenge Presskit (July 28, 2014)