Ammiano and Leno seek to reform the Ellis Act and slow SF evictions [UPDATED]

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Tom Ammiano

State lawmakers from San Francisco are launching a two-pronged attack on the Ellis Act, which real estate speculators are increasingly using to evict tenants from rent-controlled apartments and cash in on a housing market that's been heated up by demand from high-paid employees of the booming tech sector.

Assemblymember Tom Ammiano today introduced Assembly Bill 2405, which would allow the San Francisco voters or the Board of Supervisors to declare a mortorium on Ellis Act evictions when the city’s state-mandated affordable housing goals aren’t being met.

Sen. Mark Leno is also planning to introduce his own Ellis Act reforms by today’s legislative deadline for introducing new bills. He’s been working on a reform package with Mayor Ed Lee, but Leno is keeping the details under wraps under Monday at 9am when the pair will hold a press conference outside a Chinatown apartment building to announce their proposal.

Both proposals face an uphill battle in Sacramento given that San Francisco is one of only a couple jurisdictions in the state that have rent control, which Ellis Act was designed to undermine by allowing landlords to get out of the rental business and remove apartments for the market. And the real estate industry industry is expected to strongly oppose the reforms.

“It will, of course, be very difficult, but Mr. Ammiano has been talking about this for months and he’s committed to doing something,” his Press Secretary Carlos Alcala told the Guardian.   

UPDATE 2/24] Leno and Mayor Lee -- flanked by other supporters of the legislation, including Sups. David Campos and David Chiu, rival candidates to succeed Ammiano -- this morning announced the introduction of Senate Bill 1439. It would authorize San Francisco to prohibit those who buy rental properties to invoke the Ellis Act and evict tenants for at least five years, and only allow only one Ellis Act eviction for the life of each property. 

“The original spirit of California’s Ellis Act was to allow legitimate landlords a way out of the rental business, but in recent years, speculators have been buying up properties in San Francisco with no intention to become landlords but to instead use a loophole in the Ellis Act to evict long-time residents just to turn a profit," Leno said.

Ammiano’s press release follows, followed by Leno's:

 

Ammiano Introduces Bill to Stem Evictions from Affordable Housing

 

SACRAMENTOAssemblymember Tom Ammiano today introduced AB 2405 to empower local jurisdictions to stop the erosion of affordable housing stock.

 

“San Francisco is seeing a terrible crisis,” Ammiano said. “The people who have made our city the diverse and creative place that it is are finding it harder and harder to stay in San Francisco. The rash of Ellis Act evictions has only made it worse.”

Ellis Act evictions are permitted under certain circumstances when a property owner is taking a rent-controlled unit out of the rental market. However, some owners have been abusing these provisions and improperly evicting tenants from rent-controlled units. The problem is not restricted to San Francisco, although the city is going through a particularly critical loss of affordable housing.

AB 2405 would allow local jurisdictions – by means of a Board of Supervisors or public vote – to enact a moratorium on Ellis Act evictions when the local housing element is not met. Also, the bill would hide no-fault evictions from tenant records or credit checks in unlawful detainer cases, and would place Ellis Act unlawful detainer cases on civil court calendars.

“Experience shows you can’t build your way out of an affordable housing crisis,” Ammiano said. “We have to do what we can to preserve what affordable housing we have. This is one piece of that effort.”

New Legislation Closes Ellis Act Loophole for San Francisco

Senator Mark Leno Joins Mayor Ed Lee, Tenant Advocates, Labor Groups and Business Leaders

to Stop Speculative Evictions in San Francisco

 

SAN FRANCISCO – Senator Mark Leno today joined San Francisco Mayor Ed Lee, other elected officials, tenant advocates, labor groups and business leaders to introduce legislation closing a loophole in the Ellis Act that allows speculators to buy rent-controlled buildings in San Francisco and immediately begin the process of evicting long-term renters. Aiming to mitigate the negative impacts of a recent surge in Ellis Act evictions in San Francisco, Senate Bill 1439 authorizes San Francisco to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property, ensures that landlords can only activate their Ellis Act rights once, and creates penalties for violations of these new provisions.

 

“The original spirit of California’s Ellis Act was to allow legitimate landlords a way out of the rental business, but in recent years, speculators have been buying up properties in San Francisco with no intention to become landlords but to instead use a loophole in the Ellis Act to evict long-time residents just to turn a profit,” said Senator Leno, D-San Francisco. “Many of these renters are seniors, disabled people and low-income families with deep roots in their communities and no other local affordable housing options available to them. Our bill gives San Francisco an opportunity to stop the bleeding and save the unique fabric of our City.”

 

Ellis Act evictions in San Francisco have tripled in the last year as more than 300 properties were taken off the rental market. This spike in evictions has occurred simultaneously with huge increases in San Francisco property values and housing prices. About 50 percent of the city’s 2013 evictions were initiated by owners who had held a property for less than one year, and the majority of those happened during the first six months of ownership.

 

“We have some of the best tenant protections in the country, but unchecked real estate speculation threatens too many of our residents,” said Mayor Lee. “These speculators are turning a quick profit at the expense of long time tenants and do nothing to add needed housing in our City. These are not the landlords the Ellis Act was designed to help, and this legislation gives San Francisco additional tools needed to protect valuable housing and prevent further Ellis Act speculator evictions, which has already displaced working families and longtime San Franciscans. This carve out is a good policy for San Francisco, and I thank Senator Leno for being a champion on this issue. Together we have built a large coalition of renters, labor and business leaders to fight this battle in Sacramento to support middle income and working families here in our City.”

 

“Rents in San Francisco are at an all-time high. My former neighbors and I, working families and seniors, were displaced from the place we called home for several decades,” said Gum Gee Lee. “Those that have yet to receive an Ellis Act notice continue to live in fear, fear that they too will be evicted from their homes. For seniors such as myself who rely on public transportation and access to social and health services within our community, Ellis evictions cut our lifeline, our independence to thrive. For working class families such as my former neighbors from Jackson Street, they continue to struggle to survive in San Francisco. San Francisco is our home.”

 

Enacted as state law in 1985, the Ellis Act allows owners to evict tenants and quickly turn buildings into Tenancy In Common (TIC) units for resale on the market. In San Francisco, the units that are being cleared are often rent controlled and home to seniors, disabled Californians and working class families. When these affordable rental units are removed from the market, they never return.

 

Senate Bill 1439 will be heard in Senate policy committees this spring.

Comments

Meaningless grandstanding.

Posted by Guest on Feb. 21, 2014 @ 5:31 pm

It effectively says that the State no longer has any primacy over counties and cities. That would open the floodgates.

WE'll have to wait and see what Leno's idea is but, again, he has a very limited amount of wriggle room without either violating state law or the constitution.

And either way, 95% of folks in Sac will see no merit in this, unless of course it means they can exempt their much more right-wing communities from State law as well.

I suspect that Leno wants to establish some kind of minimum holding period before an Ellis. Sounds reasonable, maybe, but all it will really mean is that I will Ellis and then sell, rather than sell and have the new buyer Ellis.

A viable building can not be made viable by tinkering with the safety valve.

Posted by Guest on Feb. 21, 2014 @ 5:45 pm

"Unchecked real estate speculation threatens too many of our residents,” said Mayor Lee. “These speculators are turning a quick profit at the expense of long time tenants and do nothing to add needed housing in our City."

It's encouraging Mayor Lee is quoting language often used in many SFBG articles over the years, but discouraging it's taken him two years to start to take action. He needs to do much more, however. A slew of other changes are needed beyond this relatively minor modification to the Ellis Act.

For starters, Mayor Lee needs to tell us how many units zoned for owner-occupancy are owned by NON-RESIDENT investors and speculators. If SF has a NEGATIVE vacancy rate of about 300% (three times as many people want to live in SF compared to housing availability), then the city and state should be banning absentee ownership until there is a 10% vacancy period lasting longer than a year. When a real estate market is white-hot, you don't let well-heeled millionaires who don't even live in the city buy up units zoned for single-family occupancy. That's just stupid public policy and severely abuses local residents.

The second immediate action item on Mayor Lee's (or the BoS) list is to hold hearings with federal and state officials so they can tell us precisely how many billions of dollars of tax subsides they're giving out to property speculators. These subsidies should be eliminated immediately for all investors and the dollars used instead to build thousands of housing units priced for lower- and middle-income PERMANENT residents, with resale and rent level restrictions.

How perverse can a government be to give away billions of tax write-offs to speculators who don't live in the units, especially when residents are being forced out of the city and less than 30% of current residents can afford to buy a SF housing unit? Government shouldn't be making the situation much worse by giving away billions of tax subsidies to the bad actors doing the speculating and evicting.

Landlords and speculators follow their natural instinct to exploit other people for their own financial profit. It's been happening for thousands of years. But the government's involvement in the real state tyranny is what's really despicable. If the government can't clean up the real estate system so that it protects tenants and encourages home ownership without displacing other families, then there's no reason to support any of the current politicians no matter how much people like them personally. If they cant't change this wretched system, they're worthless anyway.

Posted by Guest on Feb. 24, 2014 @ 7:41 pm

passing confiscatory laws that were violating basic property rights.

So Ammiano wants to exclude SF from an act which specifically targets SF!

It's like a criminal trying to pass a law so he can get off a conviction

Posted by Guest on Feb. 21, 2014 @ 5:33 pm

Ammiano's bill has no chance of becoming law. This "affordable housing crises" was created by our backwards housing policies and will require a deeper solution than a moratorium.

Hopefully Mayor Lee's plan is a more realistic.

Posted by Guest on Feb. 21, 2014 @ 5:44 pm

Lee and Leno are seasoned at the art of compromise and they might just be able to cobble together something with at least some support. But of necessity, it will have to allow the significant majority of Ellis evictions to proceed, perhaps with a couple of extra hoops to jump through.

Posted by Guest on Feb. 21, 2014 @ 5:54 pm

and you don't know what it is. Do you, Mr. Jones?

Posted by Guest on Feb. 21, 2014 @ 6:01 pm

Desperation has a very distinct odor.

Posted by Guest on Feb. 21, 2014 @ 6:05 pm

that new owners cannot Ellis.

I'm not sure if that would be constitutional but, in any event, owners would just finesse their sales to fit the timeline.

One idea - a "futures contract". I agree to sell you the building to you in one year's time, conditional on me successfully Ellis'ing it. Meanwhile I Ellis and you fund the cost of that. Or I subcontract the Ellis process to you while I stay on the Title.

Posted by Guest on Feb. 21, 2014 @ 6:12 pm

would have to be grandfathered into the old rules, or the entire Act might be challenged.

I think what we would see is a lot of sales arranged with the closing delayed until after all the tenants have gone.

Instead of the normal 30 to 60 day escrow, we'd see 120 day escrows to allow the Ellis to complete before closing.

Posted by Guest on Feb. 21, 2014 @ 6:17 pm

They have a name: "installment sales", along with it's own tax rules.

It's routine to see contingencies in a sales contract and, in a case like this, there would be a contingency for the Ellis happening.

Or transferring the beneficial ownership but retaining the legal ownership.

I'm sure RE lawyers can come up with lots more end-runs around an artificial and arbitrary qualification period.

Posted by Guest on Feb. 21, 2014 @ 6:30 pm

"Accept ten grand to move now or you'll get only half of that plus an eviction on your credit record"

An owner a few doors down from me just emptied his building - a nice 3-unit - for under 50K. And no pesky Ellis restrictions for a decade.

Posted by Guest on Feb. 21, 2014 @ 6:48 pm

since their more obvious ones aren't having any impact at all. So why not pin one's hopes on a bill which doesn't have a snowball's chance in hell of passage?

Posted by Guest on Feb. 21, 2014 @ 6:22 pm
Posted by Guest on Feb. 21, 2014 @ 6:25 pm

Don't rent a place under rent control. And don't pay too little rent.

Posted by Guest on Feb. 21, 2014 @ 6:31 pm

Tenants need to plan for their own futures and not depend on landlords/others to subsidize their lives.

Posted by Guest on Feb. 21, 2014 @ 8:04 pm

Why? To be a parasite is the San Francisco way to live...

Posted by Guest on Feb. 22, 2014 @ 1:37 pm

How about a bill that makes people live within their means and save for their own futures?

Posted by Guest on Feb. 21, 2014 @ 8:11 pm

This means avoiding making exactly the minimum payments on your own debt,
pay your bills punctually, paying down your bank cards
and obviously limiting your spending with credit cards during now super real how they
work - because in the times we live in, lenders are that little little more forgiving
when the circumstance that have resulted in borrowers defaulting suggest it had been not their fault.

Posted by super real on Jul. 09, 2014 @ 9:32 pm

How about a bill that encourages living within your means and saving for your own future?

Posted by Guest on Feb. 21, 2014 @ 8:12 pm

"of the booming tech sector."

SHADES OF '99: New Data Show The Tech Boom Is Looking More And More Like A Bubble
http://www.businessinsider.com/tech-bubble-new-evidence-2014-1#ixzz2sdtB...

Posted by Miguel on Feb. 21, 2014 @ 8:35 pm

They hate success and crave failure.

Posted by Guest on Feb. 22, 2014 @ 6:28 am

Having to move, what a tragedy. I've done it 20+ times in my life. Never realized that it was a political issue. I should've screamed and cried about it. Maybe somebody would've paid me to shut up and go away.

Posted by Guest on Feb. 21, 2014 @ 8:35 pm

pc bs and b l ow jo b

Posted by Claptrap on Feb. 21, 2014 @ 10:18 pm

“Experience shows you can’t build your way out of an affordable housing crisis,” Ammiano said.

True, especially when all that's being built is for the super-wealthy. None of it is affordable.

Posted by Miguel on Feb. 21, 2014 @ 10:19 pm

What would it cost to build an "affordable" home for every wannabee who wants to live in the world's favorite city but cannot afford it?

Accompany that with your realistic plan to raise that amount of revenue, and how you will convince the voters.

Posted by Guest on Feb. 22, 2014 @ 6:29 am

The same people who argue that we can't accommodate all the city's affordable housing needs, also argue that all we can accommodate *all* of the demand if we just let developers have their way with our city. As long as they're building housing for rich people, that is.

Now some trolls are going to come forth and spew neoliberal talking points to explain how that will actually work, but all the talking points in the world can't hide their naked hypocrisy.

Posted by Greg on Feb. 22, 2014 @ 12:06 pm

Market-rate housing pays for itself and requires no subsidy.

BMR housing does not. And since BMR homes cost the same to build as market-rate homes, someone has to come up with a couple of hundred thousand, or more, for every affordable home.

That's what Miguel should be computing. If there are 100,000 people seeking affordable homes and each BMR unit needs a subsidy of a quarter of a million, then that's 25 billion or so.

Who do you and Miguel think should pay for that? Let me guess - just tax the successful.

Posted by Guest on Feb. 22, 2014 @ 12:32 pm

If you're looking for consistency in the troll's comments, you'll be waiting till hell freezes over.

Posted by Guest on Feb. 22, 2014 @ 12:51 pm
Posted by Guest on Feb. 22, 2014 @ 3:11 pm

San Francisco is not the world's favorite city.

Posted by marcos on Feb. 23, 2014 @ 10:52 am

People are moving here in the thousands from NYC.

We have tourists from everywhere.

So SF will always be expensive.

Posted by Guest on Feb. 23, 2014 @ 11:11 am

The post said San Francisco was the world's favorite city. It is not the world's favorite city.

The link speaks to a "dynamic city index" in which San Francisco scored at the top:

"The company just debuted the index, which looks at “strong short term socio-economic and commercial real estate momentum and longer term foundations for success.”

We already knew that real estate boosters and operators see San Francisco as a city ripe for the plundering.

Posted by marcos on Feb. 23, 2014 @ 12:30 pm

San Francisco was #1 in the world based on a whole variety factors.

But hey, if you prefer Texas, move there. We won't miss you.

Posted by Guest on Feb. 23, 2014 @ 12:36 pm

It has never been tried. San Francisco has been restricting housing construction for over 40 years.

Every city that has tried to build housing has succeeded in keeping it inexpensive.

People like you are the reason that working class people can no longer afford to live here.

Posted by GlenParkDaddy on Feb. 22, 2014 @ 11:53 pm

The problem isn't how long someone has owned a building but how viable that building is. Nobody Ellis'es a building where the numbers crunch. And nobody will buy a building with low rents that cannot be Ellis'ed, unless they plan for the building to meet with a little accident involving matches.

Posted by Guest on Feb. 22, 2014 @ 9:20 am

Ammiano has had a fantastic career for someone who hasnt ever really done anything meaningful. When does he go away?

Posted by Guest on Feb. 22, 2014 @ 10:12 am

with his limited ability could ever have reasonably have expected to have gone.

Campos has the same dogmatic rigidity and personal flaws, without the wit. He's toast.

Posted by Guest on Feb. 22, 2014 @ 10:36 am

He'll probably challenge Lee in the next election. I don't think he'll win, but he's certain to stink things up.

Posted by Guest on Feb. 22, 2014 @ 11:21 am
Posted by Guest on Feb. 22, 2014 @ 12:22 pm

Any politician who has been in office anytime during the past 10 years is directly responsible for the divisive, polarized economic system we are in. The incumbents are the ones who oversee the laws that reward property speculators and enrich companies who ship jobs overseas. The in incumbents are the ones who rely on regressive taxes year after year. They are the ones who load government agencies with massive debts so that the 5%ers can receive tax-free income courtesy of taxes levied on the working classes.

Even if individual politicians don't always support the current budget priorities, or tax systems, or the huge financial rewards governments give to landlords, property speculators and large corporations, very few politicians have been organizing people or working with their staff to disclose the worst excesses of government's economic attacks on lower and middle income groups. They have access to government information that the rest of us can't get, yet almost no politician does the work to ferret out that information and share it with the public.

It's time for new blood and energy in politics. It's time to vote out any politicians who have been in charge while the economic carnage has continued unabated for too many years. Of course, many liberal groups in San Francisco don't really want any economic change since their jobs and government contracts are working out for them just fine. But my guess is that voters are eager to vote for new faces, new ideas and for new politicians willing to stand up against the political status quo and against the wealthy capital and land owners who are stealing much of the country's wealth.

Let's hope there are a few new faces challenging Mayor Lee next year, who may not even rank #3 after first round votes are tallied. Ranked-choice voting means the city can choose from worthy candidates without wasting votes on politicians who have been in change while the lower and middle income groups have been getting shafted.

Posted by Guest on Feb. 22, 2014 @ 6:47 pm

Ranked choice voting also gave Oakland Jean Quan. I think they're pretty pissed about that.

Posted by Guest on Feb. 22, 2014 @ 7:59 pm

Rent control has made property owners the unintentional guarantor for the economic welfare of their tenants and for some Landlords generations of renters. Tenants don't pay the mortgage, property tax or maintenance costs to a building but yet we would be made to believe Tenants have some pseudo type of ownership to an apartment. Nor do we hear about the huge sums of money Landlords have paid through Tenant-Lawyer negotiations for a renter to surrender an apartment back to the property owners.

If there were a median rent amount or percentage decrease from current market rates base on years occupied by a renter - an Ellis act eviction would be no longer be a common place event.

My parents were renters and they each worked two jobs to save every last penny to buy their first home.

Subsidizing rent is not the answer. Giving people a real chance at ownership through a first time buyer program is available in most large cities. We can no longer afford the luxury of supporting the unaspired lifestyle of the masses. We must face the reality that living in San Francisco is expensive and will continue to ever rise.

Posted by Guest on Feb. 22, 2014 @ 11:59 am

What planet are you living on? Tenants pay the landlord's mortgages to subsidize the lifestyle of the rentier class. San Franciscans can no longer afford to subsidize landlord greed.

Posted by Greg on Feb. 22, 2014 @ 12:09 pm

rent out his property at all? And that return must be comparable with other investments he might make, some of which are a lot less effort and risk.

When you rent a car, do you consider you are buying the car for Hertz? Of course not. You are paying for the temporary use of something that you did not want to lay out tens of thousands of dollars for.

For a home, think hundreds of thousands, or even millions.

There's a problem here that you're not seeing. Landlords are being forced into becoming welfare providers and, not surprisingly, they don't want to play. Ellis is the out.

Why not start over and consider what it would take to get landlords excited about providing housing rather than getting excited about quitting?

Posted by Guest on Feb. 22, 2014 @ 12:28 pm

No one makes you rent with a gun to your head ... Just say no to landlords and don't rent. After you refuse to rent, the rental market is sure to crash....

Posted by Guest on Feb. 22, 2014 @ 1:28 pm

nothing surpasses the property stealing greed of parasite tenants....Wheres my can of RAID ?

Posted by Guest on Feb. 22, 2014 @ 1:30 pm

Nothing screams unfairness louder than the fact tenants ultimately pay the property mortgage, property tax, depreciation and other rental costs, but the landlords get the lucrative billion-dollar tax deductions. Just fixing this one small injustice would begin to have an impact on the predatory landlord class. A 90% capital gain tax on all property sales other than a personal residence and repealing tax-free property exchanges would have decent impacts too.

Eliminating private landlords altogether from the residential property market is a longer-term goal, but one that must happen before society can begin to repair itself from the on-going economic destruction of the middle and lower income groups by the banking, landlord and government cabals.

Posted by Guest on Feb. 22, 2014 @ 7:20 pm

A growing number of private landlords are already doing their part to eliminate their participation in the residential rental market. It's called invoking the Ellis Act.

Owner Occupy!

Posted by Guest on Feb. 22, 2014 @ 9:01 pm

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