CFAH

A Federal judge has given The City of San Francisco until Friday to file a legal brief justifying The City’s newly adopted and accelerated law which requires landlords in San Francisco who invoke the Ellis Act to pay evicted tenants an upfront sum equal to the difference between their current rent and a similar market rate unit over the course of two years.

Prior to the passage of the new legislation, the relocation assistance due to tenants evicted by way of the Ellis Act in San Francisco had been capped at $15,795 per unit plus $3,510 per disabled or elderly tenant.

The Federal lawsuit seeking to overturn The City’s new law argues that the increased payments represent an effective “taking” of private property, an argument The City’s brief will need to effectively counter.

While California’s Ellis Act allows landlords to withdraw their properties from the rental market, for whatever reason, it also provides local governments with the power “to mitigate any adverse impacts on persons displaced by reason of the withdrawal.” And as such, San Francisco’s new law was carefully positioned as a means by which “to better mitigate the adverse impacts for people displace by Ellis Act evictions” rather than a means by which to discourage the legal use of the Ellis Act itself.

Comments from Plugged-In Readers

  1. Posted by soccermom

    “And even with the payouts, property owners would still be able to enjoy “94 to 97 percent of their value,” [Deputy City Attorney Christine Van Aken] added.

    City: It’s not a taking…. Well,okay it’s only taking 3-6% of the value of the property.

    • Posted by parklife

      I thought that might be a good line to remember when negotiating employment contracts with city attorneys.

      “Even with your pay reduction, you’ll still be able to enjoy 94-97% of your value”

  2. Posted by Dennis

    Quotes from the City’s Brief from August 15:

    “Mitigation Ordinance is constitutional, because it is less onerous than rent control”

    “Landlords must, in effect, subsidize their tenants’ rent by the amount of the Monthly Rent Differential each and every month in perpetuity”

  3. Posted by jimmy

    I wonder why the judge didn’t ask about “how” the City came up with the relo assistance values? It would have been quite entertaining for him to expect a complicated mathematical formula, yet only to receive a response of “we use Craigslist” from Van Aken.

    • Posted by parklife

      If only the formula was as unbiased as Craigslist. In this instance, the “formula” assumes that the market rent for this flat is $7,395 per month. I find that a little hard to believe, but perhaps I am missing something about the unit involved.

      I do know that this same “formula” indicates that the market rent for my tenant’s two bedroom flat should be $4,900 when there are several vacant rentals nearby for around $1,000 per month less. If you look into the formula, you will see that it is structured to create larger payments for those rentals that have higher base rents. This would seem to be the opposite of the intent.

  4. Posted by Conifer

    Is the City publicly admitting that rent control is onerous?
    Perhaps the same arguments can be used in a court of law to challenge SF rent control, with no means testing and no dollar limit on the rent that can be controlled.
    Means testing would seem to be the minimal required in common sense.

    • Posted by Dennis

      Yes. Onerous. A direct quote… and they use the word “subsidize” when describing rent control. No longer can tenants pretend they are not being subsidized – The City Attorney has admitted it.

      Here’s the Brief.

      • Posted by gribble

        If they are being subsidized can I issue them a tax form that puts them on the hook for the amount of subsidy and then also take a business loss?

  5. Posted by Al Rodriguez

    This new law is like Prop G its legalized extortion.

  6. Posted by jimmy

    Before you can have means testing, you need to change the powers of the SF Rent Board. They have no power to compel. Besides, regardless of all the housing that would be freed up (based on means testing), the tenant industrial complex would fight to the death to stop the first chink in the armor.

    • Posted by SFrentier

      Bro, it’s Rent Control Industrial Complex(tm), and it’s my slogan!

  7. Posted by JR "Bob" Dobbs

    Don’t blame the city attorneys. Half of what they do is try to clean up the sh** that the supervisors lay on them. They have no choice and do the best they can do with some stupid laws. Their argument that rent control is constitutional even though it is more onerous that this Ellis-payment law is not a bad one.

    I am not a fan of Pacific Legal Foundation at all. But they certainly appear to have some strong arguments, now that I’ve read all the briefs. I had originally thought this case was not ripe (takings cases in federal court usually get tossed on this ground) but since this involves a direct taking of cash, it looks like they will get past that hurdle. And they make one argument that appears very strong to me: “The Ordinance Does Not Rationally Advance a Public Purpose When It Gives Money to Tenants for Their Unrestricted Private Use.” A very good point — this is nothing but a government-mandated payout from one private party to another, with no restrictions on use by the receiving party for the public good. We’ll see if that is enough to get over the very, very high hurdle to find a “taking” (that it is “taking 3-6% of the value of the property” is not a strong argument).

    But the header has it wrong. The judge “instructed The City to file a brief by Friday 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.” That sounds like an easy softball pitch to the City; they just have to show that not all property value has been deprived by the mandated payouts. That is the “takings” test, and it is a very easy one for the City to meet, and a very hard one for the challengers to demonstrate, To, this comes down to the question of whether there is any “public” good here at all served by these payouts as the City can easily demonstrate that the payouts do not deprive the landlords of all value.

    Judge Breyer is an extremely good judge. He will get it right on the law.

    • Posted by soccermom

      So… the brief requested is indeed a softball ask for the city?
      I don’t follow quite your conclusion.
      Is the judge just asking for this explanation for the sake of completeness?

      • Posted by JR "Bob" Dobbs

        Yes — the City did not really address this question in their brief. So the judge asked them to do so.

        Of course, I don’t know what was in the judge’s mind. But my read is this was a softball ask. Should be easy for the city to answer this. Doesn’t mean the judge won’t rule for the landlords on other grounds, but if he were inclined to do that he likely would not have requested this further briefing because it would not matter.

        • Posted by soccermom

          Thank you for the clarification.

          It doesn’t sound great for the landlords. I hope you are right and the common sense that a stack of money for evictees to spend on whatever doesn’t logically meet a need for housing would be enough to turn it over.

          Such a holding seems like a lot of after-the-fact policy analysis for the judiciary. But then, that’s what the judiciary is for, right?

        • Posted by JR "Bob" Dobbs

          Just one person’s prediction after reading the briefs!

          Also, this is a motion for a temporary restraining order, for which the landlords have the burden to make a particularly strong showing. Even if they don’t win this round, their odds are better on a full trial. Remember the Prop 8 gay marriage plaintiffs couldn’t get a TRO but they hit a grand slam on a full trial.

          • Posted by Eddy

            There is also the Jacoby v CCSF case filed in Superior Court last July.

          • Posted by SFrentier

            It doesn’t make sense that the city just has to prove that they are not taking all the property value. So if they take 99% that would be ok? It’s not black/white. A taking is a qualitative decision, and giving tenants indiscriminately a couple hundred G’s to do as they please is a frickin taking! The bird brain DA even had the gall to say it’s “only” 3-6%. Ok, sure. I have no problem giving out $60,000 on a million dollar prop. Where do I sign up?

    • Posted by Dennis

      “I am concerned about the Nollan-Dolan challenge, because I think it’s a serious challenge to the ordinance,” Breyer said at the close of the hearing.

      • Posted by JR "Bob" Dobbs

        Thanks, Dennis. Good article in the Recorder. So I think my read above was about right. City can pretty easily establish that some property value remains, so it is likely not a per se taking. But landlords have a shot on their argument that the payouts, made to private citizens, serve no “public” purpose, and thus the requisite nexus and proportionality between the government’s action and the desired effects is missing.

        That should win, imho, but the law favors the city generally.

        Maybe the city can “save” the ordinance by directing the payouts into a public housing fund. That would actually be far better as it would actually benefit the public rather than one single tenant who can cash in and move to Palm Springs.

        • Posted by soccermom

          If a building owner empties his tenants, fixes the place up, and then re-sells the building that there has been any net change in the quantity of housing in the city. There’s your (lack of) nexus and proportionality right there.

          Subsidizing the existing occupants at the direct expense of the new occupants (higher prices) seems the opposite of a public purpose. It only serves to make the environment more expensive. I’m preaching to the choir on this board, I know, but I hope the Pac Legal guys get the point across.

          There is no public good served other than requiring landlords to operate as charities instead of businesses. I don’t think that’s something the BOS can require.

  8. Posted by soccermom

    We could start with a proposition that requires tenants enjoying rent controlled status to file statements of assets and income annually, along with affirmations of primary residence use for the rent controlled apartments. There would be no action, initially, as a result of the filings, just the implementation of the data collection process for future policy interpretation.

    Call it the ‘Protect Rent Control’ proposition.

    This process would surface the most egregious unwarranted beneficiaries of rent control and create a better informed public dialogue, which _should_ lead to a more sensible policy.

    • Posted by jill

      great idea!

    • Posted by Q

      The privacy considerations of such a law would be enormous. Indeed, the proposal would quite possibly be illegal under sate law.

      • Posted by soccermom

        You could be right, but I doubt it.

        People receiving subsidies like unemployment insurance have to vouch for the fact that they are not employed and that they continue to look for work.

        People applying for explicitly Below Market Rate housing have to submit a personal financial statement documenting income and assets in order to qualify.

        Rent Control is by definition a Below Market Rate program for tenants. Why shouldn’t run of the mill tenants who receive benefits be different in their obligation to report income from those who seek to qualify for BMR ownership programs?

  9. Posted by soccermom

    Is there an ongoing public discussion about how crappy San Francisco Public Housing is, that I am missing?

    (rhetorical) Why don’t our supervisors spend more time thinking about how to improve what the government itself offers, rather than dictating how private landlords ought to behave? The Sunnydale projects and the Western Addition projects are socioeconomic sinks that trap hundreds if not thousands of kids every year?

    There seems to be so much more coverage of a few Ellis evictions and so little about the Public housing infrastructure is so bad.

    • Posted by Sassy

      Agreed. Most public housing authorities are the biggest slum landlords paid by us. They are corrupt agencies who will bend over backwards to enable nonresident drug dealers remain in their units so they can keep collecting rent.

  10. Posted by JR "Bob" Dobbs

    This statement is not true, and has not been the case for 15 years. By federal law, public housing agencies summarily evict any household in which someone living there has been arrested (not convicted – arrested) for dealing drugs. SF does the same (and this applies to “nonresidents” who are in fact living in the unit). Harsh, but effective. This is why areas around public housing in SF really are not that dangerous anymore. Yeah, I know, “what do you mean not dangerous?!?!?! They are nothing like they were before zero-tolerance kicked in. Not even 10% as dangerous as they used to be.

    • Posted by SFrentier

      Care to take a stroll at night through the hunters point and Sunnyvale projects and get back to us?

    • Posted by JR "Bob" Dobbs

      Do you remember what they were like 15 years ago? 10 times worse.

      • Posted by SFrentier

        Yeah but, a bullet is still a bullet.

        I had the pleasure of driving by the Sunnydale wreck a year ago- a scene out of a third world slum. Seriously.

    • Posted by soccermom

      Is there data to support this (that bad actors get pulled out of public housing summarily)?

      Something tells me a lot of information falls between the cracks. “By law” and “in practice” are very different things in managing residential property…

    • Posted by Dave Boudreau

      That might be the law, but as a practical matter the housing authority is grossly incompetent when it comes to dealing with known drug dealers in its properties. Even the New York Times has written about it.

  11. Posted by Pfffttt

    Good! It’s about damn time somebody tells the SF commies to stop raping its citizens and to keep their filthy paws out of our pockets!

  12. Posted by eddy

    Not that it matters, or that I have a claim to the name Eddy, but I find it odd since I’ve only been spoofed a few times before. And this is not me.

    • Posted by R

      Yes, why the Editor allows this is confusing.. Someone showed up a few months ago using my (albeit simple) name. I’m sure there are many dupes. Makes it all a bit confusing.

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