City Attorney Dennis Herrera has announced that his office will appeal yesterday’s ruling by U.S. District Judge Charles Breyer which struck down San Francisco’s recently adopted tenant relocation law, a law which requires landlords in San Francisco who invoke the Ellis Act to pay any evicted tenants an upfront sum equal to the difference between their current rent and the rent the tenants would pay for a similar market-rate unit over the course of two years.
“There should be no doubt that when a landlord evicts a rent-controlled tenant, the immense rent increase the tenant faces is the direct result of the landlord’s decision to evict,” Herrera said. “The district court’s decision is contrary to cases interpreting the U.S. Constitution. San Francisco is facing a housing affordability crisis that’s historically unprecedented, and our tenant relocation law serves a legitimate and lawful public purpose in helping tenants to adjust to the loss of rent control and mitigating the harms of displacement.”
Judge Breyer deemed the city’s tenant relocation law an unconstitutional taking on the grounds that its payments are “untethered in both nature and amount to the social harm actually caused by the property owner’s action.”
What does this do for the time being?
Per mikey’s question:
If a landlord initiates a new Ellis Act proceeding while this law has been declared unconstitutional, but that ruling is being appealed, which payouts apply (older and smaller, or new larger regime)?
If the ruling was declared unconstitutional, would landlords who had paid the higher fees be able (in theory) to get the money back?
Will the Levins and the Park Lane guys have to make their large payouts while the appeal is pending?
Thank you for any informed clarification.
Let’s be honest. Everything I know about the way the 9th circuit court of appeals works I just learned by investing 10 minutes in interwebz research.
Here’s what I think happens. There are 29 judges who roll around the West Coast and they hear cases in Seattle, Portland, SF (headquarters) and Pasadena.
Will Herrera’s appeal be heard by an _en banc_ panel? If so, it will be heard in San Francisco by 11 out of the 29 judges of the apellate court.
This page suggests appeals are heard by 3 judge panels.
Again, any informed pointers would be welcome.
Fun fact – this is the brother of Justice Breyer on SCOTUS.
The Ninth Circuit will either reject the appeal, or assign a 3 judge panel to hear it. One side or the other can request an 11 judge en banc ruling, but it is rarely granted.
I understand from one of the attorneys on the appeal that the panel has already been selected, and the judges skew conservative. Probably not too promising for the City.
Surprising they would form a panel so quickly given the normal pace of court activity seems to be so much slower.
There is no ‘discovery,’ or new evidence correct? Just a review of the information presented to the lower court?
What is the expected time until the appeal is heard (someone said +/- 1 year in one of the other threads I believe)?
Dan – thank you for the explanation.
The decision to appeal Judge Breyer’s decision Eviction Proceedings ruling must mean Dennis Herrera will be running for Mayor next cycle.
With a majority of City residents being renters both he and Campos must pander this constituency in order to get elected; and why not it doesn’t cost them anything to spend the City’s money to further their personal agenda.
Perhaps the eighth time around will be different for him?
The city won’t go quietly. SHOCKER! Keep going. Eventually the city with bite off more than it can chew and its actions causes a big bright light to shine on Rent Control enough to get it struck down. Thanks a lot Hererra!
Isn’t there a challenge to the law also pending in the state court system? I assume that the basis of such a challenge would be that the payments violate the Ellis Act itself as opposed to a “takings” argument.
Typical. SF politicians choose personal political gain over the constitution. Maybe this is a sign of greater worry over the potential implications of the decision as it relates to other aspects of the rent ordinance.
Why does this not surprise me? :/
The City Attorney’s job is to defend the City’s laws, not roll over and accept a ruling of the lowest level of the federal court. The anger here is misplaced.
You are correct but he must also balance the cost of litigation vs. likelihood of prevailing vs. duty to defend the constitution. He is not blindly bound to do the will of Comrade Campos, but alas – he too is a political dirtbag that has no problem using his office for personal gain.
As a San Francisco homeowner, much of what I’m reading here disgusts (and embarrasses) me. Didn’t know I live in such a bastion of Tea Partiers. The level of hyperbole has become ridiculous.
i would be willing to be the vast majority on here are moderate democrats or moderate independent, myself included. we only seem conservative compared to the nutjobs in city govt.
I agree with Spencer. I think what angers many here is that this a direct subsidy from one group of people to another on a massive scale, with absolutely no accounting for need and without asking all of the community to pay the costs. But what’s far more offensive is that this law not only won’t work, but will instead have exactly the opposite of its intended effect. It will drive up the average rent in the city and take more units off the market. It’s pretty much indefensible and that our leaders persist in such madness, well, Stephen Colbert would call that “Truthiness.”
Orland,
Actually, if you want to see hyperbole, just visit any site that caters to the tenant activist crowd. “Eviction=Death, The Ellis Act is ruining the city. Techies and landlords are scum.” It’s pretty frightening.
And as a homeowner, I assume you own a SFR. If the direct assault on your property rights and wallet was similar to that being waged against small property owners, you might feel different.
Registered Democrat here. Rent control is a useless law that divides citizen between the lucky and the less lucky. It is not even just.
Now if there was 1) means testing and 2) collective funding of the subsidy I would support it.
Agree. If the city wants to subsidize rents, then the City should be the one doing the subsidizing, not individuals.
Id even support rent control to all units (not just pre-1979) if it were means tested and collectively funded.
Of course this will never happen. The reason is the scale of the current subsidy. Last year I did a back-of-the-envelope calculation. Rent control is in the range of a $3Billion annual subsidy. There is no way a city would accept raising a tax to that amount.
The points to the core of the reason rent control is defended so vigorously: this is a massive subsidy where the ones doing the paying have little weight in the democratic process. It’s a gravy train that costs nothing to the city where extreme measures to defend it ensures you a good chance at reelection.
“There is no way a city would accept raising a tax to that amount.”
I agree that there is no way the city would propose a tax when it is much easier to blame landlords for the rising rents and to force them to foot the bill.
However, how about eliminating rent control AND implementing a rent tax with the proceeds used to subsidize low income tenants. You could structure it as a sliding scale where rents less than a certain threshold would not be subject to the tax and at the high end the tax could be substantial. Of course I would also argue that single family homeowners should share in the burden to some extent so perhaps a parcel tax could also help to subsidize low income tenants.
One issue is that it would be SFers paying SFers and we do not have a unique source of tax income for the City, like income taxes at the state or fed level.
I think a mix of rent tax + parcel tax + sales tax + corporate fee would be broad enough to share the burden.
I’m not familiar with “rent tax”. Who pays a rent tax? Tenant? Landlord?
SFS – Regarding your subsidy calculation of 3 billion, if we had income means testing for rent subsidy qualification what would be a ballpark amount for the annual subsidy? I’m thinking that the Mayor’s Office BMR program would be collecting and calculating data. That might be a good source for data to run the numbers for rent subsidies.
SFCitizen,
1 – I used to pay a “rent tax” in France. It amounts to 3%, shared equally between tenant and landlord.
2 – About a rent subsidy, the calculation I did was based on how much less rent-controlled tenants were paying compared with market rent. The $3B were a theoretical figure showing what would be needed to compensate tenants for the increase in rent. 60% of San Franciscans are tenants, and more than 1/2 of all rental units were built before 1979.
A few things I considered though:
– Market rents would be lower since rent control would not put an artificial lid on supply
– Some people will have to leave SF, since someone who now pays and can only afford $600 will never receive a $2000/month subsidy for his 1BR apartment. This will push the median income up.
Overall I think median incomes would be $90K and median rent would be $2200.
Let’s say that only people under median income would be allowed a subsidy.
Most of the sub-90K are probably renters. Say 80%. If their average income is $45K the rent they could afford is $1200, or an average of $1000/month. Multiply by 150K (80% of 1/2 the 370K households) and you will have a $1.8B subsidy. Put a few more limitations in here, and we could go down to $1B.
That’s a very rough estimate, not backed up by any precise demographic study.
Actually I think subsidies could be capped at $800 or $1000, just to keep some sanity into the system.
Yeah, voted for Clinton twice, Gore, Kerry and Obama twice, but I’m against regulations that are obviously poorly drafted and go against existing case law. This is a waste of taxpayer’s money. Didn’t know that refusing to tilt against windmills made us Republicans /golfclap.
ditto – I’m pro gay marriage (so much so that I’m in one, LOL), pro marijuana legalization (and I never touch the stuff), anti death penalty, etc. … and nothing will make you a conservative Bircher with respect to private property rights faster than being a cogent, reasoned person trying to live in San Francisco.
So they pass an unconstitutional law, get sued, lose, and now they appeal. Be nice if Herrera had to pay his own legal fees when he loses – might change his calculus…
That was a pretty brutal rebuke. I hope they have the stomach for a lot of hurt.
SF city, please meet the real world…
Apparently the tenant buyout regulations thing passed last night, so add that to the lawsuit list. And come November, you’ll probably be able to add a lawsuit against prop G as well.
May you live in interesting times.
If the tenant buyout regulation actually stays in place while the “enhanced” Ellis payments is thrown out, it will have exactly the effect of encouraging a lot more Ellis Evictions. Why bother doing a buyout if you can do an Ellis for much cheaper and you can’t condo convert either away.
anyone have the link for the buyout regs passing?
[Editor’s Note: Supervisors Pass Law To Regulate Tenant Buyouts In San Francisco.]
I feel for Herrera, behind closed doors he’s saying that this law is completely unconstitutional and has no chase of being overturned in appeals court but he’s got to do whatever his “clients” (supervisors) want.
Absolut – the only reason to buyout a tenant at this point is to get the tenant to leave ASAP vs staying in for 1 year as elderly/disabled tenants are able to do with ellis.
One bright spot from the Examiner:
“But Herrera said defending the tenant relocation law has high stakes for more than just tenants, with consequences that could be dire for laws protecting land use and the environment if the judge’s decision stands.”
Landlords should stick together and break system in order to fix it.
The Examiner’s quote is hyperbole. If this is a eminent domain issue where the government has a taking, there’s a reimbursement to the property owner. In no way does this city law impact the existing case law.
Yes – if anything, the last couple decades’ taking law supports the court’s conclusion here – because the “exaction” on an individual landowner is both disproportionate to the harm the City’s seeking to prevent, and disconnected from that harm (no proper nexus between owner X taking their unit off the market, versus the cost of units throughout the City).
A few notes on the process:
Judge Breyer stayed his decision until Oct. 24. That means it is not in effect now, but takes effect UNLESS the ninth circuit grants the city’s request to stay it pending appeal. Could happen, but odds are that the ninth circuit will not stay it because there is really no harm to the city in the decision but a lot of harm to the landlords in staying it. Plus, the landlords won, and the default is they should get the benefit of that.
The court of appeal panel will not be assigned until about a month before the appeal is heard – probably late 2015.
There is a different ninth circuit panel that hears motions, such as the city’s motion for a stay. That panel rotates and is assigned to all cases for motions only (not the main appeal). Currently, it consists of judges O’Scannlain, Berzon, and Bybee. So they will make the initial decision on whether the decision is stayed for the next year pending the appeal. O’Scannlain and Bybee are quite conservative. So a stay is particularly unlikely.
If the city ultimately loses, they have to pay the landlord’s attorneys fees. So defending this lawsuit will cost well over a million in taxpayer money since the city is paying its own attorneys’ salaries as well. I can think of better uses for those funds.
The city attorney is 99% about politics and 1% about the merits. Herrera cares only about his own political future and the futures of his (very few) political allies. That is what is driving things. Herrera is not very smart. The deputy city attorneys working under him are good lawyers, and they neither like nor respect him, but they have to do his bidding.
What do you think the chances are of trying to combine the recent buyout regulation ordinance and the (soon to pass) prop G along with this? All three make a stronger case for a takings, perhaps getting it elevated to the Supreme Court as a takings case against the city. That could have enough impact to do away with rent control. And make the Pacific Legal attorney’s famous too. And be very gratifying for us SFers to sit on the sidelines and watch 🙂
Bob: You had predicted a different outcome for this case. Do you believe Breyer’s decision will be reversed on appeal?
I had thought ripeness was the problem (generally in a takings case you have to go through state court first, and this was filed in federal court). But the opinion set me straight, and that rule only applies to takings claims seeking money. This one sought only an injunction. This looks very likely to stand on appeal, imho.
Interesting idea – and you are correct that the crazy combination of landlord obligations creates out-sized burdens, which, of course, is the whole point.
But lawsuits do best with simple facts. The Levin case was perfect. They just want to live in their place, but their tenant kept taking advantage of the shifting laws (and making stuff up — now I’m disabled!) and ended up with a six-figure payout requirement. Easy case to see the ridiculous unfairness. Not so easy to see if you scatter the facts among many code sections.
I know it’s old news but I just went through a few juicy bits of the 10/8 proceedings
“When a landlord evicts a tenant, he or she is removing from that tenant the protection of rent control. The landlord is exposing those tenants to market rates. San Francisco has said to landlord you must at least mitigate two years of that impact,” Van Aken said.
Breemer countered: “The only direct impact is the tenant must find another place to live.”
Breyer said: “They’re saying more than that; they’re saying the tenants are losing rent control. The tenant loses the protection of rent control.”
Breemer said: “Maybe the impact is that tenant loses rent-control housing and the city is trying to put the equivalent of rent control on the Levins’ back. There’s still a lack of accountability. The city will never know if the money is used for housing. They’ll never know if the people get it will really need it for housing or will stay in San Francisco. Even if that’s rational, that’s not the nexus between the impact of what they’re doing. To say you have to subsidize two years, why not ten? Why not in perpetuity? Why not pay for someone else to live somewhere forever?”
Breyer turned to Van Aken: “Why isn’t it tied to the tenant’s life expectancy?”
../..
Van Aken added: “The Ellis Act does allow landlords to go out of business, but there is no constitutional requirement that there be an Ellis Act.”
Breyer laughed.
“Really?” he said. “You say the government can require you always be a landlord? That’s like saying, constitutionally, you always have to be a lawyer. That would be an awful thing to say.”
LOL! Having to constitutionally always be a landlord AND a lawyer…that would be quite a double whammy of terrible.
This City is becoming its version of keystone cops. Gives you something to watch post World Series.
Breyer’s statements were brilliant and right on.
When you rent a place to live that does not give you lifetime and unlimited rights to do what you want. The landlord should be able to do what they want as owners.
That final statement epitomizes what I find so distasteful about the unbalanced discussion here.
One’s having a leasehold on a residence gives one the right to call it his HOME; something not even the mere owner with his fee simple can claim. HOMES deserve added protections under the law which also is all that bestows rights of ownership. It is a question of balancing the interests of the individuals involved as well as the community as a whole.
Too often the seeming prevalent attitude here is that residential rental units should be simply properties as any are capital assets from which to maximize return. That suffers the venality of greed. From a practical standpoint, if you willingly and knowingly invest your funds in residential property meant to be offered as rentals for profit, you can rightfully expect some limitations on your “freedom of use.”
I hope someday your in-laws stay in your guest room for a weekend, and loving it as a home, decide to move in permanently against your will.
If you ever try to get them out, maybe they’ll say you once told them “Mi casa su casa”, which gives them permanent occupancy rights PLUS any capital gains should you ever sell.
Oh, the and “the venality of greed”???? Really? You really wanna go there when tenants are shaking down their landlords for $100,000 after being given a discounted place to live for decades?
In a world where property values were dictated by law to increase 10% a year above the inflation rate, paid for by taxpayers, I’d give your argument a fighting chance. But in a world of risk/reward realities of investing (property values can go down at anytime), the person who puts up their cash and takes the risk deserves the reward (if any). NOT the person who got a discounted rent for years.
Do the in-laws have a signed lease which entitles them to possession? No? Then it’s not the same thing. They do? Then you have nobody to blame but yourself.
The real world we live in provides renters with certain rights. Don’t like it? Don’t be a landlord. Don’t want to pay a tenant to break a lease for which they have paid rent for decades? Don’t.
Thanks for the advice. I am a happy airbnb “host” and no regular lease will ever be written on my property. Yes this does increase the current supply problem, but it is not of my making. I am just trying to stay away from the rental trap of greedy tenants.
Well, you obviously subscribe to the values of the Communists who currently (think) they run this city. Yes, a renter can certainly call they place they rent HOME. No problem with that at all.
But residential units are simply real property. That’s it. Nothing more. They can be investments or not. That’s up to the rightful owner. An owner is not greedy by owning the property or renting it out for whatever someone will pay. This is basic business logic.
You really don’t get it. You seem to forget the insane greed that renters now will instigate when they are asked by the owner to move. The owners own them nothing, beyond respect, good luck and any legal deposit coming back to them.
You really don’t get it. You seem to forget that a landlord has signed a contract for which they have been compensated and clearly defines their tenant’s rights. The renters own them nothing beyond the terms of their lease and legally aren’t required to vacate a property without cause. Don’t like the terms? Don’t rent your place.
A renter is not greedy for demanding compensation to terminate a lease for whatever a landlord is willing to pay. This is basic business logic. Don’t like the terms. Don’t pay.
Well, ok. You’re obviously on the side of the renters. Perhaps you rent, I don’t know.
But you know that the whole “extortion by renters” is relatively new in San Francisco, now attempting to reach insane numbers. It wasn’t always this way.
Do tell us the logic of why a renter should be compensated in any amount, for being required to vacate a unit that they ONLY RENT. And don’t forget they, most likely, lived in a rental unit for many years paying way under market rent, and of course are now earning a 6 figure income, or more.
Do I care that they have to move and pay more?
Sign a lease where the payment to evict is 5K, then see the city increase the payment to 120K.
Yeah, sounds like straightforward business logic. Long term tenants know they’ve become toxic to SF owners. They just want a juicy buyout in all cases, including the last possible exit strategy for owners who can’t stand the raw deal.
i dont consider extortion to be basic business logic.
Wow, did you borrow Brahma’s “Great Book of Fake Tears”?
Tenants can switch “HOMES”. It’s just that a good deal is a hard to give up. If rent is cheaper somewhere else EVERY tenant will gladly switch HOMES, lol. There goes this ludicrous theory.
Another thing: the rent controlled tenant who’s claiming it’s his HOME and he will not budge simply hasn’t met a number he liked.
Exhibit A: The 460 Noe street tenant who gave us the usual tears and helped perpetrate the public crucifixion of the landlords has cashed out and found a better warmer HOME in the Palm Springs area.
Heck, even bona fide “home owners” have no guarantee. Earthquake or fire destroys your home. You loose your job, etc. and can’t make payments. Your area goes down and down in value (Detroit comes to mind), and you loose everything you put into the house. Etc. etc. etc.
maybe we can also request rights and protections from the city? Oh wait, renters get their benefits DIRECTLY from a private landlord. All the city has to do is pass laws saying so…..
Most cities will want to have home-owners because this brings more stability, which in turn brings the virtuous circle of community, safety, personal involvement, all qualities that a city wants.
San Francisco is looking at this the other way around. They legislate stability and do not care of the adverse impact. It’s someone else’s problem.
It’s just as if we legislated against global warming by imposing an air temperature over California. We would have a massive HVAC unit over the state, and all the adverse effects would be paid by someone else.
Nope. They have the issue upside down. Homeownership makes communities more stable.
Yes. the rental properties on my street are run down, trash always in front. The owner occupied homes are all neat, clean, trash is not apparent.
Why is it that renters never pick up the trash they see in front of their building or right at the door?
Have often noticed the same thing myself. Maybe for the same reason they remain renters.
Why is it that renters never pick up the trash they see in front of their building?
For the same reason car owners take good care of their cars, while people who rent cars treat them like cr*p.
Well, yes. True, sort of. Yes, owners can lose their job ( it’s lose not loose, BTW). And yes they can lose their house, which is real property.
But renters don’t really “lose” any real property if they are evicted, or cannot pay the rent. They simply have to move on and find another abode. But. what they seem to want is “special” rights to help them move to another place, somehow thinking the property owner MUST help them financially with that move.
Complete and utter nonsense. And thankfully, the courts are seeing that scam.
A tenant has to lose his lease and has to move out. Oh the infamy! Didn’t you know he was planning to be buried on his land? Oh, wait…
“Do tell us the logic of why a renter should be compensated in any amount, for being required to vacate a unit that they ONLY RENT.”
It’s called a lease. A legal contract which the landlord willingly signed. Don’t like the terms? Don’t blame the renter, blame yourself for making a bad business decision.
It’s called a lease that is warped by stupid SF laws, duh.
And we just saw one of those laws go down inflames for being unconstitutional. So, how do you like ‘dem apples, mr. happy renter?
And, how do you think other renters feel about paying sky high rents because some renters basically hoard their apartment? And, his do you like it when some landlords LEGALLY ELLIS EVICT said renters. Those landlords are just following the laws.
Extremist tenant advocate are playing the scorched earth strategy, except they seem to forget it’s their city too. But it’s their city only until they are kicked out of it.
Personally, the crazier the tenant advocates, the more I collect in market rent. Bring it on idiots, make me rich.
Orland,
How come you have posted twice, but answered none of the rebuttals?
My bet: you’re a poster who just enjoys the reactions created by his hit-and-runs and is not interested in debating ideas. There’s a name for that.
Well, yea you may be right, Fronzi. But some here are newbies. Unlike us, they are not that skilled in fanning the flames. 🙂
But yes, I really enjoy it here when there is debate, and rebuttal.
If you like I can point you to some threads when you abandoned the argument when backed into a corner.
No White After Labour Day and No Cornering Posters on a Friday.
Oh snap! Now I have to go home and change my trousers too.
You’re welcome to waste your time.
It takes years of training to continue an argument for days on end.
If you read my post upon HOMES, I think you will have to concede that my words are unassailable. Perhaps so only in their blandness.
My point was that there must be a balancing of interests and rights which goes unrecognized here. As to the particulars on this particular issue, I am neither qualified nor experienced (or, for that matter, enough interested in) to rebut point-by-point.
My initial comment addressed to general tenor and mood of the “debate” here on such issues. In that, I remain disgusted and embarrassed as a San Franciscan. Witness your vile comments above.
you will have to concede that my words are unassailable
What? All you said were the usual platitudes that keep being plastered on evictionfreesf placards. You are using emotional language to define a social issue. SF is expensive. Nobody owes anything more than the respect of the rule of law. If you slant the laws towards your benefit, fair enough, but landlords will use all legal means to find some semblance of balance.
Witness your vile comments above.
Vile? Please elaborate. Or better, please give me one argument I gave that wasn’t valid.
If telling it like it is is being vile, then you, sir, are living in a rosy bubble. Rent controlled tenants in SF have been overprotected for too long, petted by politicians and manipulated into numbness, and just like an overprotected kid you’ll feel the world is a mean place full of vile people. Yeah call me vile. The world is clearly black and white, isn’t it?
So, if you are neither qualified nor experienced in the “particulars on this particular issue” (sic), then how the hell do you know if the POV’s expressed here are balanced or not?
i consider what the city is doing to be vile and i am embarrasses as a san franciscan about that. the lack of economic understanding about moral hazard and incentives and constitutional law is abhorable
Why should there be a “balance” and what exactly is a “balance” and who gets to determine that?
I anticipate that all of these punitive and extortionist regulations (this case, Prop G, the new rules on buy-outs limiting free speech) will be overturned by the courts. Then the Campos comrades will (albeit slowly) disappear from the ranks of politicians, and we will elect the kinds of liberals and moderates that other American cities do.
Campos and his fellow travelers can take up collage making just a Matt Gonzales did. You can google them.
Art for the ages! Move over, Renoir and Bonnard, Campos is hot on the heals of Gonzales!
Or they can recycle themselves into the pub business. Then fail, move to the suburbs and get a cushy job at a union.
Just like Chris Daley did…moved to the burbs (but, ironically, kept his non rent controlled condo in the city.) Perhaps Sup Compost is next?
I understand Daly left his union job and is currently being supported by his wife. Even the SEIU couldn’t take him!
Maybe he’s back to playing Donkey Kong 😉
I don’t see that any stay was granted, or even requested by the city. So by my read this decision is now in force and the city is enjoined from enforcing the tenant buyout provisions.
Thanks for the update.
Dat good!