The Small Property Owners of San Francisco Institute joined local property owners in filing a lawsuit against the City and County of San Francisco. The lawsuit challenges a new ordinance that dramatically increases relocation payments that landlords must make to tenants who are lawfully evicted under the state’s Ellis Act.
The new ordinance, San Francisco Ordinance No. 54-14, was introduced in February 2014 by Supervisors David Campos, Jane Kim, John Avalos, and Eric Mar. The legislation passed on April 22 and became law.
Under the ordinance, each relocated tenant is entitled to the greater of either: a) the existing statutory relocation payment (currently $5,265.10 per tenant, up to a maximum of $15,795.27 per unit, plus an additional $3,510.06 for each elderly or disabled tenant), or b) the difference between the tenant’s current rent and the prevailing market rent for a comparable apartment, multiplied over a two-year period.
Example: A 35-year-old tenant is evicted from a rent-controlled apartment in Russian Hill. His current rent is $1,000 per month. Market rents for comparable units are $4,000. The relocation payment would be the higher of a) the existing statutory relocation payment of $5,265.10, or b) $72,000 (the difference between the tenant’s current rent and the prevailing market rent ($4,000 minus $1,000) multiplied by 24 months).
The Ellis Act is a state law that guarantees property owners’ right to exit the rental business. The new law is designed to prevent Ellis Act evictions by making them cost prohibitive. This makes the ordinance illegal. Moreover, the new ordinance’s requirements will be applied retroactively, so a property owner who began an Ellis Act eviction under the old law will now be required to pay dramatically more in relocation expenses to her tenants than she expected.
Anti-Speculation Tax
An “anti-speculation” tax, more accurately called “anti-housing” tax, was placed on the ballot by four “progressive” supervisors. We have launched an information campaign about the surtax, including a battle with the Tenants Union over the descriptive paragraph in the voters’ information booklet. The letter we sent out to over 23,000 owners of recently purchased homes contains some rather alarmist language. I was initially reluctant to sign it because it seemed to include every new owner who wants to sell within five years, but as we study the actual language of the ballot item, we find more and more types of buildings that will be affected. Many thanks to all who attended the rally on the City Hall steps against this housing killer.
Short-Term Rental Debate Continues
When Supervisor Wiener addressed a member meeting in May, he said that the short-term rental situation was the most contentious issue in recent memory. Neighbor is pitted against neighbor and renter against owner.
While the early concept was for an owner to rent out part of his home to tourists occasionally, that model is not the prevalent one in San Francisco. Owners of apartments, seeing a way to avoid the burdens of our rent control and tenant protections, have converted vacant units to short-term rentals. A few have even evicted or bought out tenants to do so. This practice definitely removes potential housing from the market, and is not good social policy. However, the people decrying the loss of housing are often the same people who imposed conditions that make traditional renting a minefield, with the risk of acquiring a tenant who won’t leave even if the owner needs the unit for his own use.
A good number of tenants who are subletting their apartments are also trying to game the system, taking on none of the risk of renting out property, such as injury liability or vandalism. We are strongly opposed to our tenants abusing their leases in this way, and while Supervisor Chiu’s legislation does not change our leases, it definitely adds roadblocks to our enforcing the clauses prohibiting subletting and commercial activities.
Concluding Remarks
The lawsuits, the rallies, the trips to Sacramento to fight (successfully!) two state bills, the press releases, the mass mailings, are all part of our pact to work with other organizations to make property ownership and renting out homes less burdensome. We continue to meet around a big table every week or two and every group has vigorously participated, with all opinions respected. This is both exciting and time-consuming, and every person who has contributed an hour or a day deserves a big THANK YOU! We also owe a very heartfelt thanks to each person who sent a letter or email or who made a phone call to protest any of these measures.
We are very, very grateful to each of our members who has renewed membership at higher dollar levels than the previous year. We heartily thank those members who have sent in additional contributions to help defray our expenses. We welcome all our new members. One new member joined SPOSFI with a $1,000 contribution. Thank you so very much! I am very proud to be president of this group of activists.
Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.