San Francisco’s recently adopted law which requires landlords in San Francisco who invoke the Ellis Act to pay their 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 has been ruled unconstitutional and struck down by U.S. District Judge Charles Breyer.
From the ruling, edited for readability with case law removed:
San Francisco’s housing shortage and the high market rates that result are significant problems of public concern, and the City legislature’s attempts to ameliorate them are laudable. “[B]ut there are outer limits to how this may be done. A strong public desire to improve the public condition [will not] warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”
The Constitution prohibits the City from taking the policy shortcut it has taken here, in which the City seeks to “forc[e] some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”
The Ordinance apparently is unprecedented in requiring a massive lump-sum payout from one private party to another in exchange for regaining possession of property. But that trail had not been blazed before for good reason. In so doing, the City has crossed the constitutional line between permissible government regulation of land and an impermissible monetary exaction that lacks an essential nexus and rough proportionality to the impact of an Ellis Act withdrawal. For these reasons, the Court GRANTS declaratory and injunctive relief from the Ordinance as a taking without just compensation in violation of the Fifth Amendment to the United States Constitution.
With Judge Breyer having stayed his decision until October 24, 2014, City Attorney Dennis Herrera will have until Friday, “the date payment must be made under the Ordinance to Plaintiff Park Lane’s tenants,” to appeal the ruling.