Friday, June 6, 2014

A Lose-Lose Scenario: Changes In Rent Ordinance Regarding Ellis Act Treatment Appear To Be Counterproductive

Update 10-21-14: Federal District Court finds this ordinance unconstitutional, see judge Breyer's opinion as published on PACER (scribd copy), case No. 14-cv-03352-CRB.

A significant change in the treatment of the Ellis Act went into effect in San Francisco on June 1, 2014 (Ordinance No.54-14). It is no longer enough to just look up the current amount for the fixed relocation assistance payment. To calculate what is due to tenants vacating under the Ellis Act one now has to employ a formula to select the greater from the two options: either the fixed amount, or "an amount equal to the difference between the unit's rental rate at the time the landlord files the notice of intent to withdraw rental units with the Board, and the market rental rate for a comparable unit in San Francisco as determined by the Controller's Office, multiplied to cover a two-year period, and divided equally by the number of tenants in the unit." Section 37.9A(e)(3)(E)(ii). The funny part is in the mathlesser entitled tenants stand a higher chance to recover large payments.