Battle over increased Ellis Act payouts in SF to enter federal court

Supervisor David Campos

San Francisco's housing struggles will be the focus of a federal courtroom, where a judge could rule as early as this afternoon to overturn a dramatic increase in relocation payments owed to Ellis Act evictees.

In response to the ongoing housing crisis and a spike in the use of the Ellis Act — a controversial state law that allows property owners to remove tenants from rent-controlled housing in order to leave the rental business, a move that also vastly increases the property's resale value — The City now requires landlords to pay evicted tenants the difference between their current rent and the cost to rent a similar unit at current market value.

That could mean, in some cases such as where a tenant had lived in a long-desirable neighborhood like the Marina or in a gentrified place like the Mission, relocation payments of $100,000 or more.

Prior to the new relocation requirement, Ellis Act evictees were owed no more than $4,500.

The law went into effect June 1, but has also been applied retroactively to tenants who had received eviction notices previously.

Other efforts to give tenants additional eviction protections have failed in the state Legislature.

The San Francisco Apartment Association, which lobbies on behalf of The City's property owners, and other landlord advocates filed a federal lawsuit in July against the law, authored by Supervisor David Campos. The law “punishes” property owners, and the increased payments amount to government seizing property from a private citizen, the plaintiffs claim.

And because there is no stipulation that the relocation payments be used on renting housing in San Francisco — or on any housing at all — the law does not even necessarily accomplish its goal of “helping displaced tenants get housing” in The City, according to filings made Friday.

“It's like the lottery,” Janan New, executive director of the Apartment Association, said Friday. “If you're in the right place at the right time, you've won the lottery.”

The main plaintiffs in the case, Daniel and Maria Levin, own a two-unit building in the Marina on Lombard Street. They live on the top floor, and to “take occupancy” of the renter-occupied lower unit would cost $117,000 under Campos' legislation, they claim.

The City Attorney's Office is defending the law in federal court. A spokesman for City Attorney Dennis Herrera declined to comment Friday, but said in court filings last week that The City faces “a true crisis of evictions and housing affordability.” Despite the increase in payouts, the law still allows landlords to take advantage of “immensely lucrative” opportunities by emptying a building and selling it off, the spokesman noted.

“They can still make millions,” Campos said Friday, noting that courts have previously upheld the ability of cities to place “reasonable controls” on property. “They just won't make as many millions as they were making before.”

The bench trial before Judge Charles R. Breyer is scheduled to begin at 10 a.m.

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