California joins Oregon in approving statewide rent control

This was expected to pass for a few months, and just happened now.  The bill is expected to be signed in to law in a matter of days. Even municipalities with already existing local rent- and eviction-control ordinances may see a significant impact, because the statewide law will incompass buildings previously excluded through the year of completion (in San Francisco, it raises the cut-off from 1978 to 2004, a 15-year mark). As to the areas previously excluded, those where rents used to increase by large margins will be the first to feel the difference.

How Preemptive Is the Ellis Act?

On June 20, 2018, California Supreme Court denied review of Small Property Owners of San Francisco Institute v. City & County of San Francisco (2018) 22 Cal.App.5th 77, thus affirming its holding, striking a 10-year ban on alterations of non-conforming units following the Ellis Act evictions.  The decision was reached on the preemption argument of the Ellis Act (Cal. Gov. Code § 7060 et seq.).  How often it is a winning argument, and how universally its preemption is applied? Let us take a look at a few recent decisions.

"Educators" ban on evictions is gone, no longer

[02-14-2018: Court of appeals reversed the judgment];
[Cal. Sup. Ct. denied review on April 25, 2018; Rent Ordinance reinstated back the "educators" ordinance's language on May 15, 2018, see the press release here].

On September 28, 2016, the San Francisco court adjudged the writ of mandate granted (URL upd. 06/26) on August 31, invalidating the infamous ordinance of last year, which was injecting a new type of a protected tenant, the "educators." That the new limitation was overbroad and unnecessary wide, both as to covering categories of tenants, and in including previously unheard-of amount of types of evictions (even the temporary move-out for repairs)—all that I have already had an opportunity to cover in my earlier post. Thus, the Court's decision, invalidating the ordinance, was not a surprise to me.

What is surprising is how the Court arrived to invalidating this ordinance. This path seems to me worth our attention, to make a mental note in case of a similar argument in the future.

10-year ban on residential mergers following non-fault eviction is confirmed as invalid by the appellate court

On September 19, 2016, San Francisco homeowners got confirmed in their relief, when the appellate court affirmed our county court's decision to strike a 10-year ban on residential mergers, following a non-fault eviction. The decision became final on October 24 (3 Cal.App 5th 463).  And yes, we are now in the fifth series of appellate decisions, since July 1, 2016.

New Category Of Tenants In SF - Educators

[02-14-2018 update: Court of appeals reversed the judgment today];
[Cal. Sup. Ct. denied review on April 25, 2018; Rent Ordinance reinstated back the "educators" ordinance's language on May 15, 2018, see the press release here].

The rules of equality never meant to apply equally to the rule-makers themselves. This had often been the case since the times immemorial, and so observed by many, including Oliver Wendell Holmes.*  And in the context of our times and our local legislature on the issue of housing, examples of unequal treatment of classes of individuals in California are aplenty. Yet at least, for most of the times, you can see a public policy behind the legislatively created exceptions. Not all the times, but often. For a counter-example, when the reasoning is not immediately apparent, see CC §§ 43-53.9 and related sections, where the series of statutes provided a right to create senior-only housing (technically, a discrimination by age, albeit for a laudable purpose). In most of those statutes, one county (Riverside) is expressly excluded from these rules, see §§ 51.2(c), 51.3(j), 51.4(c), 51.10(d). I am sure there was some valid reason for that, but I don't know what it is.

Our county of San Francisco has its own rich history of laws treating us differently from elsewhere, especially in the field of housing regulations. Discriminating or differentiating the application of laws to individuals based on their age, disability, or familial status were for many years recognized applications of public policy of supporting those groups, by offering them additional protections, including such protections from evictions. Until now, however, it was more or less applied with care, providing a right for these individuals to claim a "protected" status as a tenant, in the concept of owner- or relative-move-in evictions, and there was a counter-balance for similarly disadvantaged landlords, by recognizing that the moving-in person could be in a similar position of being old or having children.**

Yet now we have a new and unprecedented piece of legislation, discriminating individuals by the source of income: Ordinance 55-16 created a new category, an "Educator," and it will widely apply to almost all non-fault kinds of evictions. Not only it offers no counter-balancing exceptions, but it takes away the ones existed before. I have a feeling that this legislative gem will be soon tested in courts, but for now it is the law, coming into effect on May 23, 2016. I had a chance to speculate on it, when it was introduced, let's now look more closely at what's coming.

Another upside-down amendment to Rent Ordinance is introduced - Campos Bill Re: Educator Evictions

Politics have an inherited dependency on voters. At the core of politics is "making of a common decision for a group of people." [Wikipedia] Not surprisingly, politicians get voters' support by proposing decisions favorited by majority groups of people. The danger of democracy voting itself out was noticed long time ago. A fresh example from far away: Switzerland is going to vote on guaranteeing each citizen a monthly payment of approximately $2,800 fixed income, directly from the government, no effort required. How do you think this proposed measure will survive at the polls? I too think it will pass with a rare rate of success. [I was wrong--Swiss voted against it on June 5]

Example from a recent local past: in September 2015, our supervisors had to vote on the proposed vast package of anti-lanlord measures. Each of the decision-making voting members, a supervisor, is an elected figure, naturally concerned with influencing the electorate of her/his district, so that the majority group votes in support. If tenants constitute a majority of voters, how do you think the elected candidates would vote, especially when the a supervisor's voting is weeks away from her own re-election? Supervisors unanimously (on most points) supported the measure, and it is left to stay with us, at least until being examined by the courts,* even if the supervisors are gone. It did not help some of the sups who were due for re-election. In this city, one quote, even remotely suggesting something against the "eviction crisis" theme, can cost supervisor a seat. And it did. Read the coverage on ballotpedia.org, you will see that the winner for that district was supported by the Tenants' Union. The losing candidate was obviously not.

And turning to the current events, here is a new example of a successful attempt of winning tenant-voters' hearts: Supervisor David Campos (whose bid for reelection is up this year) introduced an amendment to eviction regulations, to limit evictions of anyone related in employment to education. What can be wrong with that? Let's count ways.

Ellis Act Victory for SPOSFI -- Ordinance 68-15 Is Stricken

Another great victory for the Small Property Owners of San Francisco Institute and Zacks & Freedman (URL upd. 06/26): Rent Ordinance No. 68-15 is stricken and found as "unreasonable" as its predecessor, Ordinance No. 54-14. Look at the case's online record here, (URL upd. 06/26) to see the October 2, 2015, order.

City of Richmond, CA, enacts Rent Ordinance

Our neighbor city across the Bay became the latest municipality to enact a rent ordinance. It was adopted on August 5, 2015, and is codified as Richmond Municipal Code, Article XI, Section I, Chapter 11.000, named the "Rent Control and Just Cause for Eviction" ordinance. It goes into effect on September 4, 2015, 30 days after its adoption.
[UPDATE 10-1-2015: the ordinance is suspended (URL upd. 06/26) while placed on the referendum ballot for voting]

Fresh Amendment to Ellis Act Relocation Payments Ordinance

The San Francisco Rent Board has recently amended Section 37.9A of the San Francisco Administrative Code, capping the amount of proposed relocation payments at $50,000 (URL upd. 05/26). This is still an about three times larger amount than what is currently allowed, but at least there is now a limit.

1:1 - Two Recent Attacks on Ellis Act Notice Went Different Ways

Within one week the Appellate Division of the San Francisco Superior Court issued two decisions addressing requirements for an Ellis Act eviction under S.F. Admin. Code, Section 37.9A(f), taking an evidently different approach in reading the section in two cases and achieving opposite results.

Is There A True Ellis Act Eviction Epidemy—A Study In Reading Statistics

On March 23, 2015, the Rent Board published its annual statistical report (URL upd. 05/26) on eviction notices, filed with the Board from March 1, 2014, through February 28, 2015. Page 2 shows a break-down by the types of notices and their change in usage in comparison to the previous year. I noticed a 48% decline in filed notices under the Ellis Act cause for eviction, and wondered, whether this decline is connected with the last year's attempt to increase the relocation payments due to the tenants to some cosmic amount, something the courts currently holding as unreasonable and unconstitutional. I saw it closely related, and along with that I also made several peculiar findings on how statistics work in scaling up (scarring up?) the reported amount of the Ellis Act evictions.

2014 Developments in Real Estate in San Francisco

This looks like a perfect moment to look back and observe what's new on our real property scene and what changes were most notable in 2014. I can't climb down your chimney, but please accept as my present to you, this short summary of the most noticeable movements I assembled below:

Anti-Ellis Act SF Ordinance Found Unconstitutional (Fed) and Unreasonable (State)

Federal Judge Breyer found the recently enacted San Francisco [anti] Ellis Act ordinance unconstitutional in a memorandum published on October 21, 2014. (Scribd copy). It is interesting that the court addressed the application of ordinance's formula as bringing counterintuitive results in amounts payable to the tenants (see page 8 of the memo), in line with the hypotheticals I made in my June post. In February, state Judge Quidachay found the ordinance "unreasonable." (Rent Board (URL upd. 05/26 — Wayback snapshot; original Rent Board copy gone) copy).

Update: the Rent Board issued a bulletin confirming that the subject payment requirements under the new ordinance are currently off, and the payments proceed under the prior scheme.

Update 2-20-15: on the state trial court level, demurrer to Jacoby's petition is overruled (URL upd. 06/26), on the distinction between characterizing the payment to evicted tenants as "unreasonable" or "prohibitive."

Update 3-25-15: the Rent Board had the decision on demurrer in Jacoby case published (URL upd. 05/26 — Wayback snapshot; original Rent Board copy gone) as well, but what is more interesting is the annual report (URL upd. 05/26), issued March 23, 2015, covering the statistics on eviction notices filed from March 1, 2014, through February 28, 2015. Page 2 shows the impact this unreasonable [state court] and unconstitutional [Fed. court] legislation had on the housing: 48% decline in filed notices under the Ellis Act cause for eviction. For the short time the legislation was alive, it slashed the total number of a whole of Ellis Act filings in half--a huge impact by all means.

Update 6-14-15: the Rent Board caps (URL upd. 05/26) proposed total payment amounts at $50,000. More on this here.
Update 10-2-15: the court strikes this new 50K cap proposal, as even more unreasonable than the original regulation (Coyne (URL upd. 06/26) case, CPF-15-514382)

Update 3-21-17: the court of appeals affirmed the trial court's decision in Coyne and Jacoby, invalidating both 54-14 and 68-15 ordinances.



______________________

More real property posts

Your options and available strategies in handling evictions will depend on your case's particular facts. If you want to learn on your options, rights, and obligations in contesting or preserving your real property rights, including the Ellis Act evictions, make your first step toward taking control over the circumstances, and call my office at (415) 987-7000. I will be glad to assist in guiding you through the jungle. The only thing you can't afford is to stay put and uninformed. My office provides a confidential assessment of your particular scenario, free of charge, and I will share with you the results of the analysis along with my thoughts on available solutions.

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 math: lesser entitled tenants stand a higher chance to recover large payments.