Can politicians force you to operate a business or compel you to be a landlord?  Can they block you from occupying half of your own home, forcing you to rent space to lodgers who can stay there as long as they like – at below-market, government-controlled rental rates?

Can bureaucrats order to you pay huge sums of money to a tenant before you can take a rental unit off the market and get your property back?   

If you live where common sense and constitutional rights prevail, the answer to these questions would be “no.”  But not if you live in San Francisco.

This explains why San Francisco homeowners Dan and Maria Levin are so frustrated.  They live in a small, two-unit home on Lombard Street.  Or rather, they live in half the house – the upper unit.  They would like to be able to occupy the whole house but they can’t because of a harsh new city law that strips owners like the Levins of the fundamental right to control their property.

You see, a tenant lives in the Levin’s lower unit.  Thanks to the city’s new “Relocation Assistance Payment Ordinance,” the Levins are prohibited, as a practical matter, from changing that situation and transforming the unit from rental space to living space for themselves and their family.

Under the new law, San Francisco landlords who want to remove a unit from the rental market have to give the tenant a gigantic payment.  The amount is the difference between the tenant’s current annual rental payment (which is usually a rent-controlled rate) and the cost of a comparable rental property on the open market – multiplied by two years.  There is no income requirement for a tenant to receive the payment and the payment requirement is enforced retroactively.  It applies even to rental property owners who completed all legal processes to withdraw a unit from the rental market before the new law took effect.  For the Levins, this would mean paying the tenant $117,000 in order to be able to fully occupy their own home!

Incredibly, while the government calls the payment requirement a “relocation” payment, there are no rules on how the tenant can spend the cash.  The tenant can use the money for a new apartment or anew Porsche! 

Unjust Fee Blocks Homeowners From Occupying Their Own Home

“We simply can’t afford this huge sum as the price of occupying the lower unit of our own house,” said Dan Devin.  “We own a small business and have worked seven days a week for the last 20 years and are finally at a point when we are hoping to have some time and peace for ourselves.  But we can’t see ourselves scuttling our retirement plans by having to pay over $100,000 to a tenant.”

The Levins certainly aren’t in the game of “house flipping” or seeking any kind of fast buck.  They’ve lived in their Lombard Street house since 2008 and want to stay there.  The tenant was in the lower unit when they bought the place, and they told the tenant at the time that their plan was to occupy the entire house.  They tried to negotiate a fair relocation arrangement, to no avail – and then the city slammed landlords with the new law that makes it essentially impossible to take units off the rental market.

“We do not want to be in the rental business,” said Dan.  “We want the lower unit for our own use.  We want to be able to have family and friends stay with us occasionally, but we have no room.”

The Levin’s’ story will be replicated in case after case across San Francisco – property owners will be denied control of their homes or buildings because of the city’s demand that they write astronomical checks to their tenants. 

Pacific Legal Foundation’s (PLF) Lawsuit: The Constitution vs. San Francisco

PLF is advancing several powerful constitutional arguments against this unjust law.  Among them are these two: 

  • ·         A shakedown for private parties.  San Francisco is forcing landlords to make substantial payments to private parties (tenants) without any conditions on how the money is spent.  This is a “taking” for private gain, not “public use,” as required by the Fifth Amendment.

 

  • ·         A confiscatory exaction.  PLF’s Supreme Court victories in Nolland and Koontz held that government can’t impose unjust conditions on the exercise of a state-law property right.  In California, state law, (the Ellis Act) allows landlords to withdraw their units from the rental market.  But San Francisco is conditioning the exercise of that right on a demand that has no connection to the proposed change in the property’s use:  The fee to the displaced tenant can be spent for anything, not necessarily for a new place to live. 

The Levins Say Thank You, PLF

“I am a third generation San Franciscan,” Said Dan Levin.  “Both my grandparents were in San Francisco predating the 1906 earthquake.  But we have our backs against the wall with these new, unconstitutional laws.  “We are so disturbed by our city politicians using small property owners as pawns in their political pursuits.  This is the reason we feel so strongly about joining Pacific Legal Foundation’s lawsuit for property rights.  We are very grateful for PLF’s help.”

Pacific Legal Foundation is able to pursue this lawsuit on behalf of all San Francisco property owners and represent the Levins free of charge, as with all our clients, because of the support of our donors.  Thank you!  Please continue to be generous so PLF can keep “rescuing liberty” for this generation and those to come!

This article was written by the Pacific Legal Foundation.  Donor-supported Pacific Legal Foundation (www.pacificlegal.org) is the leading watchdog organization that litigates for limited government, property rights, individual rights, and free enterprise, in courts nationwide. PLF represents all clients free of charge.  For more information, visit www.pacificlegal.org.

 

 

 

 

 

 

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