Tenant advocates scored a big win this year when a new local ordinance, sponsored by Supervisor David Campos, passed the Board of Supervisors with a veto-proof 9-2 vote, guaranteeing that tenants could no longer be evicted under the Ellis Act without getting paid large lump sums by landlords the difference between a tenant's current rent and two years' rent in a similar, market-rate apartment in the same neighborhood. But now a landlord advocacy group, the San Francisco Apartment Association (SFAA), is making good on its promise to file suit against the city on behalf of landlords, saying the new law is "oppressive and unconstitutional."
Campos's law was meant to discourage landlords and real estate speculators from evicting tenants purely for profit as has been happening in some considerable numbers the last few years and make the "going-out-of-business" angle for landlords, which was the original intention of the Ellis Act, more of the focus.
But as soon as the Board voted to approve the law, the SFAA went to the media vowing to sue, with its executive director Janan New trying to conflate the laws around owner move-ins with Ellis Act evictions. At the time, speaking to CBS 5, she cited the relatively rare instance of a new building owner wanting to evicts its tenants in order to move in himself and his entire extended family, saying that for his seven-unit building that could now cost him a half-million dollars. However, this would only be legal if he were going to let everyone live there for free, so one would assume that if he could afford to buy a seven-unit building outright and collect zero rental income from it, he could probably afford the eviction fees too.
In the case of that same owner, he'd still be permitted to move himself into the building under owner move-in laws, without the new Ellis Act fees kicking in, and then he'd just have to wait for tenants to vacate if he wanted to take other units off the market free of charge. And if this was a case of a rent-controlled building with multiple tenants paying nominal rents, maybe he should have thought twice before buying it.
As the Business Times reports, the Pacific Legal Foundation, which is working on the new lawsuit on behalf of the SFAA and the pro-property-owner Coalition for Better Housing, says the new Ellis Act ordinance "requires rental property owners to pay their tenants oppressive and unconstitutional sums of money before the owners can regain personal use of their property." Again, misleading. The Ellis Act is not the same as an owner move-in. "Personal use" in this case either means a sale of the whole building, or the odd instance of a family or friends all wanting to live together without rent being exchanged.
SFist reached out to Supervisor David Campos's office, and aide Nate Allbee responds, "We're surprised at the lawsuit but frankly not worried. Relocation costs have been part of our system for a long time now. Our legislation simply changes the amount of relocation costs from an arbitrary number to an amount that accurately reflects the market at the time of the Ellis eviction. If we have the highest rents in the country, landlords will have to pay more for kicking tenants out of their homes so they can sell their buildings at higher profits."
It remains to be seen whether a lawsuit like this will have any legs. In the meantime, State Senator Mark Leno may try once again to pass a statewide Ellis reform, which was shot down by the Senate in June. His proposed reform was aimed at real estate flippers, and would require landlords to have owned rental properties at least five years before invoking the Ellis Act.