A federal judge has struck down San Francisco's progressive legislation that counteracts the increased use of the Ellis Act to evict longterm tenants, as the Chron and others are reporting. In a ruling that came down late Tuesday, U.S. District Judge Charles Breyer wrote that it is not the responsibility of landlords to cover the large costs of tenant relocation simply because the real estate market and the housing shortage has made relocation in San Francisco so expensive. "The ordinance requires an enormous payout untethered in both nature and amount to the social harm actually caused by the property owner’s action," Breyer wrote.
The case was brought by a coalition of landlords and real estate interests including a developer that recently bought a large building at 1100 Sacramento and have been trying to empty it of its long-term tenants in order to turn all 33 units into TICs. The new law, sponsored by Supervisor David Campos and which took effect in June, would have required that developer, Park Lane Associates, to pay out approximately $1.5 million to the 10 remaining holdout tenants who have refused previous buyout offers. The timing of Breyer's decision was designed to aid this situation as Park Lane Associates have an October 24 deadline to compensate these evicted tenants. (Under the terms of the law, landlords are responsible for paying evicted tenants the equivalent of the difference between two years of their current rent and the rent for an equivalent market-rate apartment in that neighborhood, a sum that is typically north of $100,000.)
Breyer has stayed his decision until Friday (October 24) in order to allow the city attorney to appeal the case.
Breyer also said that Campos' legislation does not pass constitutional muster, and wrote, "A property owner did not cause the high market rent to which a tenant who chooses to stay in San Francisco might be exposed, nor cause the lower rent-controlled rate the tenant previously enjoyed."
Campos has issued a statement saying, "When you stand up against powerful interests, you can expect those interests to fight back. That's what we're seeing right now. This is not a permanent setback." As the Examiner reports, e's pushing City Attorney Dennis Herrera to appeal the case.
The landlord plaintiffs, which also include the San Francisco Apartment Association, have already vowed to take this fight to the Supreme Court.