San Francisco Business Times reports on exploring “legislation that would allow the city and county of San Francisco to impose a vacancy tax on property owners to help mitigate the impacts of the widespread practice of warehousing valuable residential and commercial units”.
Landlords sometimes keep units vacant to avoid the burdens of rent and eviction control regulation. However, these “ghost units” do contribute to the scarcity of housing.
The Rent Ordinance defines housing services to include quiet enjoyment of the premises, repairs, replacement, maintenance, painting, light, heat, water, elevator service, laundry facilities and privileges, janitor service, refuse removal, furnishings, telephone, parking, rights permitted the tenant by agreement, including the right to have a specific number of occupants, whether express or implied, and whether or not the agreement prohibits subletting and/or assignment, garage facilities, parking facilities, driveways, storage spaces, laundry rooms, decks, patios, or gardens on the same lot, or kitchen facilities or lobbies in single room occupancy (SRO) hotels, supplied in connection with the use or occupancy of a unit.
While some of these items seem inexorably intertwined with the rental unit itself, others – like access to a parking space – could previously have been “severed” by simply changing the terms of the tenancy to no longer include a parking space. The Board of Supervisors worried that this led to de facto evictions, where landlords gradually took away the amenities that tenants depended on, in an effort to urge them to vacate. By requiring “just cause” for severance, the City prevents these items from being removed piecemeal, where a landlord may only take away such housing services with sufficient cause (e.g., permitted work to convert garage space into an ADU unit).
The corollary of this concept is found in Rent Board Rules & Regulations §12.20, which provides that a tenant cannot generally be evicted for violating a unilaterally-imposed change to the term of their tenancy. (This was the subject of the 2015 opinion Foster v. Britton.)
You can read the full text of Ordinance 178-06 here.
The “Leno Amendment” to the Rent Ordinance (enacted through Ordinance 237-99 added to the list of “housing services” the rights permitted the tenant by agreement, including the right to have a specific number of occupants, whether express or implied, and whether or not the agreement prohibits assignment and/or subletting.
It also limited evictions for breaches of lease covenants where the landlord has unreasonably withheld consent to sublet and the tenant has only made a one-for-one replacement of occupants.
You can read the full text of Ordinance 237-99 here.
San Francisco Ordinance 21-05 expanded the scope of relocation assistance “mitigation payments” to all tenants displaced by the Ellis Act, regardless of whether they were “low income”.
Ordinance 21-05 provided for an inflation adjusted payment (roughly tracking first months’ rent, last month, and security deposit), which payment was upheld as “reasonable” in the case Pieri v. City & Cty. of San Francisco (2006) 137 Cal. App. 4th 886. However, the “Pieri reasonableness” standard was called into question in the case Coyne v. City & Cty. of San Francisco (2017) 9 Cal. App. 5th 1215, which measured the propriety of mitigation payments by whether they imposed a “prohibitive price” on a landlord’s exercise of his state law right to go out of the residential rental market.
You can read the full text of Ordinance 21-05 here.
Justin discussed recent changes to the San Francisco Fire Code, requiring property owners to provide notifications, disclosures and on-site floor plan displays to facilitate fire safety for multi-unit housing. Justin addressed concerns relating to Costa-Hawkins waiver issues, where landlords are required to provide information to “residents” (as opposed to, e.g., “master-tenants”).
SFAA is dedicated to educating, advocating for, and supporting the rental housing community so that its members operate ethically, fairly, and profitably. SFAA’s is a trade association whose main focus is to support rental owners by offering a wide variety of benefits that address all aspects of rental housing industry.
The San Francisco Board of Supervisors finally passed one of two competing bids to strengthen the “Owner Move-In” provision of the Rent Ordinance. The proposed changes followed an NBC Bay Area investigation into the occupancy status of dwelling units where the landlord had initiated an OMI eviction.
The NBC Bay Area investigation attempted to determine whether these dwelling units were, in fact, occupied by owners following the termination of the previous tenancies. It reviewed each of over 300 OMI notices filed with the Rent Board in 2014. After making contact with occupants of about 100 of these units, it found tenants paying higher rent, instead of owner-occupiers, in roughly a quarter of the units.
Existing law requires that a property own who invokes the OMI provisions move into the unit within 3 months, occupy it as their full-time residence for 36 months. A property owner must do all of this in good faith, and, while it is permissible to vacate earlier (e.g., if the owner relocates and moves out sooner than expected), and resume rental use, the property owner was required to re-offer the unit (1) at the former rental rate, and (2) to the displaced former tenant, for a period of three years following the service of the notice of termination.
In an effort to address these alleged “fraudulent OMIs”, the Board of Supervisors has been considering competing proposals, by Supervisor Farrell and Supervisor Peskin, for the last several months. Each would to enhance the constraints on re-rental of units recovered in OMI evictions (extending the timeframe to reoffer to the displaced former tenants from three to five years). The Board of Supervisors ultimately passed Farrell’s version, which also provided for misdemeanor liability.
Continue reading Board of Supervisors Passes Ordinance Amending Rent Ordinance To Address “Fraudulent Owner Move-In Evictions”
The San Francisco Chronicle reports on the Campos enhanced relocation payment “law die[d] quietly” last week. The “law” in question was actually a pair of efforts in 2014 and 2015, introduced by then-Supervisor Campos, which would increase the relocation assistance payment owed to tenants to be displaced by the Ellis Act, from an inflation-adjusted payment (roughly equal to first and last month’s rent and deposit for a replacement apartment) to a 24-month rent subsidy, compensating for the difference between the displaced tenant’s former rent-controlled rate and fair market value.
The 2014 ordinance was essentially a blank check, where the rent differential could easily reach six figures per unit. Property owners quickly challenged Ordinance 54-14 in both state court (Jacoby v. CCSF) and federal court (Levin v. CCSF). Each court determined that Ordinance 54-14 was invalid. However, the court in Jacoby found that the payment was not “reasonable” under the existing standard for mitigation payments (set forth in Pieri v. City & Cty. of San Francisco (2006) 137 Cal. App. 4th 886), while the Levin court made a determination on constitutional takings grounds, finding the payment was an “exaction” unrelated to the owner’s choice to exit the residential rental market. (It found that the adverse impacts that the payment sought to alleviate were not caused by the landlord’s choice to use the Ellis Act, but by “market forces unrelated to the impact of the property owner’s use of the property”.)
San Francisco tried to institute enhanced mitigation payments again in 2015, with Ordinance 68-15. The second ordinance grafted itself onto the first one (creating some confusion about how and when it was to be applied), capping the payment at $50,000 per unit and providing an administrative review process for landlords who could not afford the increased payment. Again, property owners challenged the ordinance as conflicting with the Ellis Act.
The trial court in Coyne v. CCSF found that the changes did not solve the preemption problems, and reached the same conclusion. The First District Court of Appeal later reviewed Jacoby and Coyne together, finding that the enhanced mitigation payment ordinance imposed a “prohibitive price” on a property owner’s ability to exit the residential rental market, in the published opinion Coyne v. City & Cty. of San Francisco (2017) 9 Cal. App. 5th 1215.
The City (as well as amicus curiae) sought a depublication order from the Supreme Court of California, urging that Coyne v. CCSF created a new preemption standard and, by referencing Levin, improperly extended exactions takings jurisprudence. However, in a unanimous ruling, the Supreme Court denied the requests to depublish and further declined to review the matter on its own motion.
The First District Court of Appeal recently vindicated a landlord’s efforts to terminate a tenancy pursuant to the Ellis Act, where both the Trial Court and the Appellate Division found the notice of termination of tenancy invalid, as the landlord paid only the adults and not the child who occupied the unit. That case, Danger Panda v. Launiu interpreted the term “tenant” in the section of the Rent Ordinance requiring relocation payments to “tenants”, determining that this was a term of art with a specific import: “Construing section 37.2(t) according to its plain language, a tenant is a person who is entitled to occupy a residential unit (1) to the exclusion of all others and (2) pursuant to a written agreement; oral agreement; sub tenancy approved by the landlord; or sufferance.” The Court noted, however, that it was only interpreting that term, not considering whether the Board of Supervisors had the authority to confer a relocation benefit on a child.
Supervisor Ronen picked up this cue, introducing Ordinance 123-17, which requires payment to every “Eligible Tenant”, defined as “each authorized occupant of the rental unit regardless of the occupant’s age”. Danger Panda resolved the uncertainty in whether minors were entitled to Ellis Act relocation assistance payments (as they are for other non-fault evictions under the Rent Ordinance). Interestingly, Ordinance 123-17 may resolve further uncertainty about whether a landlord is required to pay persons with whom she has no privity, but who nonetheless occupy a rental unit.