Lawyers representing a coalition of developers and small-time landlords were in court yesterday arguing this case we previously reported on regarding Ellis Act payouts to tenants. The lawsuit is challenging the City of San Francisco to defend the legality of the recent ordinance that requires large, lump-sum payouts to evicted tenants under the Ellis Act. That ordinance, sponsored by Supervisor David Campos, is equivalent to the "taking" of private property by government not unlike eminent domain, say the plaintiffs, and this law overreaches in a way that no other tenant-protection law in the country does.
As the Examiner reports, on Monday, after hearing 45 minutes of arguments by City Attorney Dennis Herrera and plaintiffs' attorneys from the Pacific Legal Foundation, federal Judge Charles R. Breyer gave Herrera's office until Friday to file a brief "explaining how the increased payouts are not an example of government placing so much restriction on private property that it deprives owners of the property's value."
Campos tells CBS 5, regarding his legislation, "What we have put together is a pretty reasonable standard that is actually based on where the market is today."
The case may sound a little dry, but this is actually huge stuff for tenants' rights advocates and everyone who's been paying attention to the Ellis Act eviction frenzy happening around town the past couple of years and this court's decision will dictate whether the city can continue to obligate landlords to pay evicted tenants the incremental difference between their current rent and two years' rent in an equivalent apartment in this market.
The plaintiffs in the case are the San Francisco Apartment Association (SFAA), a landlord advocacy group; the Coalition for Better Housing, a 35-year-old advocacy group that fights rent control measures; developers Park Lane Associates, who bought the 33-unit apartment building at 1100 Sacramento Street last year with the intent of making it the most expensive TIC in S.F. history; and several individual landlords who are also angry about the law because they now can't afford to evict someone.
Per the Ex:
The City countered that the payouts are a control similar to rent control, which has already been successfully defended in federal court as legitimate, Deputy City Attorney Christine Van Aken said.
Only about 20 percent of properties in The City subject to the new law would trigger huge payouts, Van Aken said. And even with the payouts, property owners would still be able to enjoy "94 to 97 percent of their value," she added.
Such high profit margins for real estate "does not put us into the realm of taking," Van Aken said. "Not even close."
Meanwhile, Park Lane Associates jumped into this case because the size of their profits on their very expensive, luxury Nob Hill TIC depend on the outcome of this suit though they stand to make many millions when they finish rehabbing and selling those units, they still have 10 holdout tenants who might be owed upwards of $100,000 apiece under this new law.
While we might not be able to muster a lot of sympathy for them and the real estate risk they took in buying a huge rental building and deciding to flip the entire thing, you might want to give some sympathy to smaller landlords with longtime tenants and perfectly reasonable, family reasons for wanting to free up one of their units. Landlords Daniel and Maria Levin are a party to the suit, and they own a two-unit building on Lombard Street where it's going to cost them $118,000 in tenant relocation costs if they want to take over their downstairs unit for their own personal use.
This case was fast-tracked by Judge Breyer in order to meet an October 24 deadline that Park Lane has to pay their 10 remaining evictees.
Plaintiffs' attorneys, meanwhile, say they will "take this to the Supreme Court if necessary."