According to the Anti Eviction Mapping Project, tenants have been evicted from 4,472 rent-controlled units since 1994 by landlords using the Ellis Act. These units can’t be rented again because the Ellis Act designation means landlords are “going out of business” by taking these units off the market. The incentive, however, is commonly for speculators to turn around and sell the newly vacated units for a huge profit.
Because of California’s Ellis Act, landlords are able to evict all tenants in a building if the landlord keeps the entire building off the rental market for at least five years. If the landlord chooses to rent the building again, the previous tenants must be invited back first at their previous rent. A lot of landlords do not follow these rules because of a lack of enforcement.
With a lack of enforcement and accountability, landlords exploit the Ellis Act to 1) evict tenants to convert the units into condos or Tenancies in Common and then sell each condo or TIC at extremely high prices; or 2) simply evict tenants, do some quick renovations and sell the building, which now has a higher value because there are no long-term tenants. Public policy that allows property owners to make profits by destroying strong and stable communities is bad policy.
For example, Adam Joseph Phillips, the manager of 366 Development, is trying to evict the tenants of 3039-3041 California St. by using the Ellis Act. They issued Ellis Act notices to the tenants just months after purchasing this apartment building, after the tenants refused a buyout. Why would someone purchase an apartment building, then weeks later take steps to go out of the rental business?
366 Development describes themselves as “a small value investor through real estate.” Like most landlords who are using the Ellis Act, Phillips acquired 3039-3041 California St. just a few months ago. He knew there were long-term tenants in this building. He knew that his ability to maximize the profits on this building would depend on getting those long-term tenants out.
Similar to Phillips, tech CEO Tariq Hilaly of Lumity Inc. bought an apartment building at 1642-1644 Church St./208 Valley St. in 2014 at a bargain price due to the fact that it housed long-term protected tenants.
Betty Rose Allen and her now deceased mom Beatriz Allen, who lived there since 1978, defeated Hilaly’s fake owner-move-in eviction more than a year ago when Hilaly said his mother-in-law needed to move into the building, yet she already had a home next door at 208 Valley St.
Hilaly retaliated by issuing an Ellis Act eviction and is now saying his parents need to live in Betty Rose’s long-term home at 1642 Church St. There are other properties to buy that have a vacant unit where he can move in his relatives without evicting current tenants. But if he really needed a home for his extended family, as his lawyers insist, the large first floor unit below Betty Rose’s apartment, where he bought out other senior residents, is still vacant and available for his family to move in, though he is alleging that his mother-in-law lives there. Thus, the tactic of buying up property with protected tenants and emptying buildings in the hopes of reselling for inflated prices seems to ring true in this case as well. Beatriz Allen died while fighting the latest Ellis Act eviction, and now more than 1,000 people, including neighbors and neighborhood businesses are urging Hilaly to have a heart and stop trying displace Betty Rose, who has suffered enough.
How did these landlords “go out of business”? Can you claim to be “going out of business” if “the business” is to evict tenants and collect profit on the property you “invested” in? Sounds like these landlords are doing business as usual.
Safe and habitable housing is a right. Choosing to make money on something that should be available as a right in a time of crisis is immoral. On top of that, it’s illogical to claim that you are “going out of business” if “the business” consists of evicting tenants. Repeal the Ellis Act. The real estate industry and speculators have been benefitting from this for far too long and it doesn’t make any sense.
Cynthia Fong is a tenant organizer with the Housing Rights Committee of San Francisco in the Richmond District.