Leno Abandons Bill To Curb Ellis Act Evictions In San FranciscoJune 25, 2014
Senator Mark Leno has decided not to pursue his proposed bill to curb speculative Ellis Act evictions in San Francisco.
Drafted “to ensure that real estate speculators in San Francisco do not buy rent-controlled property and empty it of long-term tenants,” Senate Bill 1439 was tentatively passed by the State Senate last month but then rejected by the State Assembly’s Housing and Community Development Committee last week.
As plugged-in people know, a similar bill which was proposed back in 2007 never emerged from the Senate Floor.
Comments from Plugged-In Readers
Good. Some sort of sanity, even if it was not what Leno wanted.
so once again we have the best government the real estate pigs can buy.
When you come home, look around you and ask yourself how and by who those walls were built. Probably “real estate pigs”. Some people create, others consume and find things too expensive.
Exactly. People often complain about those “evil developers” and “greedy real estate” people, but forget that those are the people that built their homes and their neighborhoods.
Yes, and there’s a risk involved. All deals I have made were done at 40 to 60% with my own hard earned money. Some people do less, but I put peace of mind before leverage.
Real estate developers are gods, dammit… ye shall grovel before them in humility or face their wrath on Socketsite!
Self-aggrandizing much? I don’t think AlfieJr is referring to people who actually take the time to invest in building a new building as in the category “real estate pigs”.
Now, those who come to S.F. in order to to position themselves to take advantage of growth that’s already underway, buy an existing older building, empty it of tenants in order to flip it, or illegally convert the units in older existing buildings to de facto hotel rooms by listing them on AirBnB and the like, those people are in the category “real estate pigs”.
They aren’t contributing anything, they aren’t “creating” anything, they’re just parasites, like a
You should ask yourself which group you and people like you are really in before you pat yourself on the back.
Brahma, you should join the Noe Street Hypocrite whiner and move to Palm Desert.
How can you call people “parasites” when your biggest accomplishment in real estate was probably to get approved for a lease. People who acted to curb this so-called “parasitism” in 1917 ended up bunking up 6 per bedroom 50 years later due to a dire lack of construction where housing was needed.
I have built and renovated. I have always left a property in a better shape than when I found it. I also have profited from these actions and from right timing and risk taking.
This is a free country and you can’t always attack others for your own frustrations. Now Palm Desert is cheap but warm. Say high to the Noe Street “victim” for me.
What was the final amount extorted by that fine citizen of Desert Hot Springs?
Oops, I mixed my transplant desert cities. No idea what that amount was but whatever the amount this is a painful slap in the face of activist and their hold-no-prisoners tactics. The cause celebre was nothing but a regular human being with his qualities and his flaws. The hero-vs-villain battle just became an old “what’s in there for me?” and this sums up the rental pool situation in SF.
I have to assume this has to be less than a typical buyout. The Ellis stigma for the owner was there. The battle was lost if not for a silly technicality. When the writing is on the wall, time to move on. Kudos to the tenant for keeping his poker face.
And do you consider someone who buys a building and evicts a tenant in order to live in the building to be a “real estate pig”?
How about a landlord that has owned his/her building their entire life and would like to obtain a decent price for the building, is he/she a “real estate pig”.
Or is anyone who challenges the implied lifetime lease at below inflation rent increases a “real estate pig”?
I can only suggest to you what my so-called progressive friends tell me when I mention the street people that sell and do drugs in my neighborhood, “if you don’t like it here, move”. The US Constitution allows you the right to travel…perhaps Oakland has rents you would enjoy?
“Some create, others consume AND find things too expensive.”
Fronzi, can I use that quote??
But seriously, there’s room for so much more grey area, nuance even, than the either/or edict you’ve declared here. And it does sounds awfully self-aggrandizing to self-title as a “creator”, particularly in the context of house flipping and Ellis-acting in this town. Little in common with those “creatives” whose impact is noteworthy and memorable.
In any event, I agree with Brahma with regard to his definition of a parasite below; Context is key.
Sure, it all depends if you believe in capitalism and free markets. If you do, then you probably understand the need for market agents that will provoke price realization. Speculators, flippers, builders, etc: they all participate in a market that will transform inefficiencies into opportunities.
Rent control is a major inefficiency, both economically and socially. The middle class young cannot move to SF because the old are hogging places they pay 25% of market value. The result is the squeezing out of the middle class from SF. “Some/Many” landlords are not getting the ROI they deserve for their risk and effort. They will not improve their property and delay needed maintenance, causing a drag on construction spending.
Having rent controlled tenants calling people parasites is extremely hypocritical. Rent controlled tenants are feeding off a landlord, weakening this person until he throws up his arms and gives up. In many cases this means selling to someone who will spend the time and energy to clean up the situation. Someone that you call parasite, that I would call a cleaner. Someone who knows you have to get your hands dirty when the situation requires it. But from the passive tenant prospective, you cannot see that because you are still living like a fully grown up child.
Because we should amend state law because one small city just cannot manage its own housing requirements
I think these measures are just created to earn progressive street cred points.
If supervisors were really concerned about making life easier for San Franciscans, they’d use their brains to solve the multiple issues that is plaguing SF today:
– Ridiculously overpriced and undersized public transportation
– Widespread homelessness
– Bloated budget that can seem to balance only because we are very very lucky to have TECH in here
But hey, we need to protect rent control, the insanely unjust law that doesn’t look who it punishes or rewards, because voters are hooked on the cheap rent.
im sure he never thought it was pass. it was a ridiculous proposal
Cueing up Beck’s hit single right now as I read in delight…pa ba ba baba baaaaa…
Things are gonna change, I can feel it
And now one from a different era-
na na na na, na na na na, hey hey hey, goodbye…
I’m so sick and tired of listening to all the whiners who washed up here (in SF) in the 90’s and feel they have the God given right to a lifetime Lease and a “job” at a City Supported non-profit.
San Franciscans have been complaining since 1849 about “new People” moving here and driving up rents and prices.
To all you whiners in your rent controlled apartments: Cry me a River-I have no sympathy for you.
I am what some might call a “Real Estate Pig”. I’m a Realtor and work very hard for my clients, mostly older empty nesters, looking to sell and trade down. I’ve never Ellised a building nor have I ever evicted a residential tenant. Despite all that, in 2009-2011, there just were not that many sales and my income dried up.
I was then forced to short sell my condo in 2011, loosing my $100K down-payment plus about $35K in improvements. Did I try to get public assistance, food stamps, whatever? NO. I found a job in Southern California for less than 1/4 of what I was making in 2008 and moved there. I lived simply, saved up and returned to San Francisco last Summer.
Yes, being forced to move out of your home is painful, be it an Ellis Act Eviction, Foreclosure, Act of God or OMI. However whining is what small children do and it rarely works anyway.
Wow, sorry to hear from the short sale. I hope you got your loss back. What defines you is not how you make a win, but how you react after a loss. Kudos for the fighting spirit.
Good bye Leno.
This was a stupid law – and would have meant more tenants got evicted just because owners would need to evict just to sell.
Polititans like Leno, Avalos & Campos – have no real world reality and will hurt more tenants with their silly ideas.
The Assembly was 99% full of small property owners – Leno doesn’t know what it is to save up, and buy a place and offer to housing to others – he only thinks he knows how to take it back. Leno we live in the USA not the USSR – and the rest of the state doesn’t care about San Francisco whiners.
Hey socket site……thanks for censoring my comments. Figures, considering your in SF.
Boom. Your representative Mark Leno has reintroduced legislation to require building owners to hold a property for 5 years before asserting any Ellis Act rights to possession.
This totally makes sense, because if a carpenter sold a truck to a plumber, the city would totally require the plumber to operate the truck as a carpenter for five years before he could start using the truck for plumbing work. Also he would make the plumber pay all of the carpenter’s customers when he went out of the carpentry business.
I like your real world analogy — easy to understand by average layperson. You would make an excellent trial attorney: juries love you and judges find your common sense and sense of humor refreshing enough to repeat @ dinner parties.
You’d better hope there aren’t any tenants on the jury, as they may take offense to having their domicile relegated to a used truck lot. The lords of the manor are not known for their sensitivity to the cares of the many, thus the potential need or justification for this law. Careful lest you be hoist by your own petulance.
The fact that housing is being almost handled as a consumer good or working equipment is also the reason why it is so plentiful. We could look back to Moscow in 1985 and see 5 families sharing one apartment because of the cumulated housing deficit caused by excessive overreach.
Plus your backward logic freezes people into distinct classes, whereas in reality Americans are often renters, owners, landlords, builders all within the same lifetime. Of course in the idealized county of the free lunch, classes tend to cling to their entitlements, shooting themselves in the foot and getting stuck in a dead end.
Reaganvilles of early 1980s America were known for families living in their cars, some as close as Mission Bay. The so called ‘mobile homeless’, tragically trendy if not very fashionable. So fun for the lords of the land to play pretend every peasant can be a prince(ss), while harvesting record rents in one of the least affordable cities in America. Some people can afford to idealize and trivialize with mixed metaphors, some can’t.
If a plumber buys a business from a carpenter, then (s)he would assume all of the obligations of the business, including accounts, contracts, warranties, etc. This law wouldn’t prevent or burden a building owner wanting to sell used equipment. The market for used appliances and second hand furniture will remain untouched by Mark Leno’s bill.
@PTTL. Your relegation of the trade of carpentry to some sort of ‘used truck lot’ speaks to the degree of your unfamiliarity with work and lack of respect for labor. The pervasive sense of entitlement that renters have in San Francisco would be a challenge in a jury trial is a fair point. It’s a good thing judges decide these at the appellate level.
Being a carpenter is an honest and good trade, and so is being a landlord when performed fairly in an environment with even-handed rules and regulations. But running a business in either capacity (carpenter or landlord) is and should always be as much of a choice under reasonable regulation as would be opening a cupcake shop or a day care center. People have the right to choose the professions they follow.
A building is an asset with contracts (leases) attached to it. Invariably, the leases are one-year leases that the tenants have ‘overstayed’ as is their right under San Francisco law. Of course, you are absolutely correct that new building owners have an obligation to respect the existing contracts attached to the assets they have purchased. The challenge is that the city has taken away the option (other than the Ellis Act) of going out of business.
If a carpenter had a contract to build a house, and then he sold his business, (if negotiated in the same manner that a building buyer buys a building with existing tenants) the new buyer would have an obligation to fulfill those carpentry contracts.
What a building buyer is faced with in San Francisco is fulfilling the terms of contracts that were for a definite period (1 year leases) whose termination or ending has been nullified by city laws. Thus the state of California provides an ‘escape valve’ which is the Ellis Act.
What Leno is trying to do is to force asset owners to continue to operate businesses they do not wish to operate for an extended period of time, not under leases that would have been covered by the period in question, but under leases that landlords have been forced to extend under city regulations.
Judge Breyer put is plainly in his rebuff of SF city attorneys in the inflated relocation payment case that was ruled unconstitutional: “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.”
Thanks for the lecture, professor. We all need the occasional lesson in pomposity, and how better than by example. I shall treasure yours always.
Being an astute observer, you may want to reread my previous posts above, as your premise: “Your relegation of the trade of carpentry to some sort of ‘used truck lot’” is not to be found therein.
Anyway, whatever spankings judges give Leno and comrades will merely demark a line to toe. And they certainly seem determined to tow the law there. Perhaps the Joad’s Hudson Super-Six truck is still running in the hearts of Americans.
Problem with gold rush town’s analysis is that the California Supreme Court has held there is no constitutional right for a landlord to “go out of business” and thereby evict tenants who are living under a lawful rent-controlled lease. Of course, a landlord can always go out of business by selling his building (but the buyer will take the place subject to any leasehold interests of the tenants, which has been the law for hundreds of years).
The Ellis Act provided a right by statute to go out of business by evicting the rent-controlled tenants, with conditions. Our elected representatives thus do have the authority to add more conditions to the Ellis Act, or even to abolish a landlord’s right to “Ellis” altogether. There are, as Judge Breyer determined, limits to forced tenant payments that one can impose on someone exercising his rights under the Ellis Act, but the legislature could nevertheless get rid of the Ellis option altogether. This particular proposal is a matter of policy, not constitutional rights.
A right to go out of business isn’t necessary. It’s implicit in running any business. More on the exchange that preceded Breyer’s “have to be a lawyer” comment:
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.”
“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.”
Laughter rang out through the courtroom.
I think it’s like saying there’s indeed no constitutional right for a restaurant to stop selling peanut butter sandwiches for lunch, even if they’ve been selling them for years and some customers really like the sandwiches. Businesses get to choose how to run their businesses, within the law. There’s no need for a ‘constitutional right’ to quit.
The issue is whether it’s reasonable requiring a business to be owned and run for 5 years prior to a change in the business. Keep selling those sandwiches for 5 more years.
Judge Breyer made a funny little joke, but that is not the law, and that is not what his ruling was based on.
The state supreme court already decided that if you are a landlord with rent controlled tenants, the city can rightly prevent you from ever evicting that tenant, even if you want to stop being a landlord – you say there’s no need for a constitutional right to quit, but without one (or a statute like the Ellis Act), you simply must continue to allow your tenant to remain in your building. If a landlord can be forced to allow a tenant to remain in the building forever (which is the law under the constitution), then it goes without saying that the landlord can be forced to allow the tenant to remain for only 5 years. Hence, this proposed revision is simply a policy decision by the legislature, unless you want to try to change the constitution.
Landlord/tenant laws are very different from any laws governing sandwich making. So it’s not at all like the right for a restaurant to stop selling peanut butter sandwiches for lunch.
Honest question: What is the case law that establishes this part:
“The state supreme court already decided that if you are a landlord with rent controlled tenants, the city can rightly prevent you from ever evicting that tenant, even if you want to stop being a landlord – you say there’s no need for a constitutional right to quit, but without one (or a statute like the Ellis Act), you simply must continue to allow your tenant to remain in your building.”
I would recognize that providing sandwiches is different than providing housing, but there is also a long history of rights of possession and use. That an owner of something has a right to use it, within the law. Depriving an owner of that ability constitutes a taking (As we know from Judge Breyer!) So that’s why I am so interested to understand the case law that says a landlord has to provide housing forever to a tenant and that isn’t a taking.
Nash v. City of Santa Monica (1984) 37 Cal.3d 97. Terrible decision imho. Gave rise to the enactment of the Ellis Act.
Nash asserts that he is “not seeking compensation from the City of Santa Monica for being forced to stay in the apartment-rental business, but only the right to go out of that business.” Conceding that there are no decisions precisely in point, and without identifying any particular constitutional provision, Nash contends that there must be limitations upon the power of the [37 Cal.3d 103] state to compel a person to pursue a particular business or occupation against his will.
. . .
The City of Santa Monica has not done that to Nash, however. Rather, it has told him that so long as tenants remain in his apartment units, and so long as he continues to receive a fair rate of return on his investment, he may not evict them and demolish the building. Nash remains free to minimize his personal involvement by delegating responsibility for rent collection and maintenance to a property manager. He remains free under the ordinance to withhold rental units from the market as they become vacant. And, he remains free to sell his property and invest the proceeds elsewhere. The problem arises from the fact that Nash prefers to do none of these things, but to demolish the building and keep the land beneath as an investment. This he claims an absolute right to do, as owner of the property.
The state Constitution protects the rights of “acquiring, possessing, and protecting property ….” (Cal. Const., art. I, § 1.) Both federal and state Constitutions protect against deprivation of property without due process of law. Yet, “‘[i]t is thoroughly established in this country that the rights preserved to the individual by these constitutional provisions are held in subordination to the rights of society. Although one owns property, he may not do with it as he pleases any more than he may act in accordance with his personal desires.'” (Miller v. Board of Public Works (1925) 195 Cal. 477, 488 [234 P. 381, 38 A.L.R. 1479].) Thus, an ordinance restrictive of property use will be upheld, against due process attack, unless its provisions “are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” (Euclid v. Ambler Co. (1926) 272 U.S. 365, 395 [71 L.Ed. 303, 314, 47 S.Ct. 114, 54 A.L.R. 1016].)
. . .
All regulation of property entails some limitation upon the liberty of the owner; and, to the extent that the regulation limits the uses to which the property may be put, it entails limitation upon the owner’s liberty to pursue his chosen occupation or business at that location. If the owner wishes to pursue his preference, he may be constrained to sell his property and move elsewhere. If the value of his property has decreased as a result of the regulation, he may perceive that to be an undesirable alternative, and to that extent feel economically constrained to continue in his present field of endeavor. Yet, the existence of these legal and de facto limitations upon his freedom of choice do not operate to subject the property regulation to a strict scrutiny test, under modern legal principles. (See Agins v. City of Tiburon, supra, 24 Cal.3d 266, 277, affd. 447 U.S. 255.) [37 Cal.3d 105]
Bottom line: being a landlord is different from other professions.
Thanks for that reference. Very interesting reading. The dissent from Justice Mosk, I believe, holds some interesting counterpoints, including a SCOTUS ruling supporting the notion of a right to go out of business. Mosk writing:
“I begin with the disbelief of the United States Supreme Court that one may be prevented from going out of business. In Textile Workers v. Darlington Co. (1965) 380 U.S. 263, 270 [13 L.Ed.2d 827, 834, 85 S.Ct. 994], Justice Harlan wrote for a unanimous court: “A proposition that a single businessman cannot choose to go out of business if he wants to would represent such a startling innovation that it should not be entertained without the clearest manifestation of legislative intent or unequivocal judicial precedent …. We find neither.”
This is followed by the opinion of Judge J. Skelly Wright in Robinson v. Diamond Housing Corporation (D.C. Cir. 1972) 463 F.2d 853, 867: “None of this is to say that the landlord may not go out of business entirely if he wishes to do so or that the jury is authorized to inspect his motives if he chooses to commit economic harakiri. There would be severe constitutional problems with a rule of law which required an entrepreneur to remain in business against his will.”
We’ll see how far Leno gets this time.
Yes – that was the uber-liberal California Supreme Court days. Pushing too hard by the pro-tenant types may lead to the unraveling of many tenant protections that were put in place in the days when the courts were very different. May already have seen the beginnings with Judge Breyer’s decision (and he is no right-winger at all).
Does Leno’s bill needs 2/3 votes? If so, his bill will be thrown out since Democrat has lost super majority.
If Leno’s bill needs a simple majority support, we have to hope that majority of the democrats are not as radical as SF’s clowns.
Keep selling those sandwiches for 5 more years.
And more importantly keep selling those sandwiches for cheap
SF should allow landlord to evict tenants who overstayed the lease term, which is usually 1 year. Tenant signs a lease with landlord, SF city has nothing to do with the rental agreement.
I thought that Democrat has lost its super majority in California Senate and Assembly. Does Leno’s bill needs 2/3 votes? If so, Republicans can save us from the disaster if Democratic moderate is too weak.
The key to Nash v. City of Santa Monica is that nothing is stopping a landlord from going out of the landlord business. The building can be sold or turned into a passive investment by contracting out the property management role.
Whats at issue is regulations on running a business. And if the law made the regulation, the law can specify when and how that regulation is applied.
If you own a contaminated property, you can sell it but you can’t just disown it and any costs associated with it by declaring a right to go out of business. Even actually going out of business, i.e. bankruptcy, has rules which take into account other parties that may be impacted. You can’t unilaterally declare bankruptcy on all your own terms.
Please don’t equate rent-controlled tenants with toxic contamination. Tenants deserve to be treated decently as they are under the provisions of current law, with notice for termination of tenancy along with statutory relocation payments that have been supported in the court system. No residents are forced out in the middle of the night.
No one is suggesting SF landlords want to abandon or disown their buildings. Quite the opposite – that the regulations governing rent increases and capital expenditure expense pass-through ensure that no one owning a pre-1979 building with long term tenants will have much incentive to spend money to improve the housing stock. Go out of the rental business and then sell the same units in much better shape to permanent resident owners? That’s the goal and the path forward, and the only one in which owners are compensated fairly for the risk and expense of upgrading their buildings.
And actually, people can unilaterally declare bankruptcy. It’s the very nature of declaring something. They are subject to a system of rules for doing so, but anyone can declare bankruptcy any time. People do in multiple times in different jurisdictions.
“Please don’t equate rent-controlled tenants with toxic contamination. ”
That wasn’t the point. Point is that there is no right to just walk away from any liabilities or responsibilities you might have.
“And actually, people can unilaterally declare bankruptcy.”
But you don’t get to unilaterally write the terms of your own bankruptcies. The government can and does make rules for bankruptcies. There’s no right to just do as you please.
UPDATE: Bill To Freeze Speculative Evictions In San Francisco, Take Three.
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