San Francisco's Prop. M legacy will be a bill for $122K

‘Passage of this measure will lead to costly litigation that the voters will ultimately pay for,” read part of an argument opposing Proposition M in the November 2008 election. The measure passed, and today the Board of Supervisors will vote to pay $122,500 for the legal fees of plaintiffs who just won a case invalidating Prop M.
Prop. M was designed to “prohibit specific acts of harassment of tenants by landlords” and gave the Rent Board power to reduce a person’s rent or award triple damages if a landlord committed any one of 15 listed offenses, including, “interfere with a tenant’s right to privacy” and “threaten the tenant, by word or gesture, with physical harm.”

The law already prohibited the actions on the list, but Prop. M meant that such complaints could be brought to the Rent Board instead of law enforcement or civil court. Prop. M also awarded attorney fees to a tenant who won his or her case at the Rent Board. No such provision was afforded to a property owner who prevailed.

The proposition was put on the ballot by the then-Board of Supervisors: Tom Ammiano, Chris Daly, Sophie Maxwell, Jake McGoldrick, Ross Mirkarimi, Aaron Peskin and Gerardo Sandoval. Supervisors Michela Alioto-Pier, Carmen Chu, Bevan Dufty and Sean Elsbernd voted against the measure. After it passed with
58 percent of the vote, several parties, including the San Francisco Apartment Association, the San Francisco Association of Realtors and the Coalition for Better Housing, filed for an injunction to stop the enforcement of Prop. M, which was granted in January 2009.

The City Attorney’s Office and the plaintiffs took the matter all the way to the local appeals court, where all the provisions of Prop. M were struck down as “an attempt to bypass the judicial system and permissibly endow the [rent] board with judicial power constitutionally reserved to the judiciary.”

Gone from the law are the triple damages, attorney fees and 12 of the 15 prohibited acts. All that is left are three provisions that essentially restate the powers of the Rent Board to decrease a person’s rent if the landlord fails to fix tangible physical damage. And a bill for $122,500.

Propositions C and D will both likely result in legal fights

I am repeatedly asked if Propositions C and D, the two pension reform measures on the ballot, will hold up in court. So, I’m presenting my quick guide to the law and Props. C and D.

The main legal issue is that Props. C and D change the amount of money that current employees have to pay into the retirement system.

The first thing you should know is that, if either proposition passes, we’re going to court. Prop. C might have been a “consensus measure,” but plenty of city employees were left out of the room when the sausage was being made, and have made no secret of their intent to challenge Prop. C. As for Prop. D, there will be a line of unions waiting to prevent it from taking effect.

The second thing you should know is that public pensions are not governed by federal law (like private ones are), so we have to look to murky California contract law to analyze the measures.

Retirement benefits for work already performed generally cannot be changed. But whether an employee has a contract for benefits based on future work is iffy, because an employee can get fired or demoted before retirement. However, assuming The City is contractually bound to provide future benefits at current rates, there are two ways to legally change those contracts. Either one will do.

First, a contract can be changed where it is “reasonable and necessary to achieve an important public purpose.” While there is not much case law on this point, you may recall that last year’s pension measure, Proposition B (the precursor to this year’s Prop. D) was challenged in court before it went on the ballot. There, the court ruled that changing current employee retirement plans may be OK if The City can show that the change is necessary to protect the solvency of the pension system. Props. C or D could argue that increasing employee contributions is for an important public purpose.

The second way to make changes that disadvantage
workers is to accompany them with a “comparable new advantage.” Props. C and D can each claim (as the city of Long Beach did back in 1955) that keeping the retirement fund solvent is a benefit for current employees that justifies the contract changes.

Supporters of Prop. C insist it is a more legally sound plan because, while city employees pay more when the economy is down (a disadvantage), when the economy gets better, employees will pay less than they pay now (a new advantage). Under Prop. D, rates go up and do not come down.

Specifically, under Prop. C, when the amount that The City must pay into the retirement fund falls below 11 percent of total payroll costs, employee contributions would also decrease. According to projections by the San Francisco Employee Retirement System in 2009, the city contribution won’t be less than 11 percent until sometime after 2030. For employees who plan to retire before the happy days are here again, this is a false promise that means no actual “comparable new advantage.” And no advantage for
Prop. C over Prop. D.

In other words, both propositions are basically in the same boat on uncharted legal waters.

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