Zumper Attributes a Third of San Francisco’s High Rents to VC Funding

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The San Francisco Business Times reports on a recent Zumper analysis that attributes a third of San Francisco’s legendary rental rates to the spending of venture capital on firms in the Bay Area. As the Business Times notes, when firms get funded, they hire. At the same time, this increase in cost of living makes it more difficult to hire, so maybe there are actually limits to San Francisco’s soaring rental rates.

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San Francisco Adds Additional Funds to Ellis Act Legal Defense

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BeyondChron reports on the City’s increased funding of Ellis Act eviction defense. While the overall theme of the article is that Ellis Act evictions are on the decline, any recent downward trend is more likely attributable to the passing of an enhanced relocation payment regime earlier this year. This may be keeping new Ellis efforts at bay until hearing on the validity of the new ordinance on September 24th.

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City Economist Chimes in on Effect of “Mission Moratorium”

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The San Francisco Business Times reports that City Economist Ted Egan has concluded that the “Mission Moratorium” will cause a slight increase in housing costs across the City, with only a limited impact on the City’s ability to produce affordable housing. The Business Times notes that the moratorium nonetheless has the support of a majority of voters as the November ballot approaches.

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Evidentiary Presumption in Berkeley Rent Ordinance Punishes Landlords Who Fake Owner Move-Ins

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“The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.”

In Mak v. City of Berkeley Rent Stabilization Board (2015) 240 Cal. App. 4th 60, the First District Court of Appeals discusses what happens when a landlord coerces a tenant to enter an agreement that contravenes city law governing owner move-in evictions.

Under Berkeley law, a landlord cannot terminate a tenancy other than for “just cause”. Rental units are also rent-controlled, except to the extent that they are deregulated by state law (i.e., Costa-Hawkins). And, while a landlord can terminate a tenancy if they intend to reside in the rental unit for 36 months (under the owner move-in provisions of Section 13.76.130A.9 of the Berkeley Rent Ordinance), this does not result in a decontrolling of the unit for the next tenancy (under Costa-Hawkins) if/when the unit is put back on the rental market (as a result of Berkeley Regulation 1016). In other words, it’s fine if you want to live in your property, but you don’t get the benefit of market rent if you move afterward.

The court in Mak evaluated the rent-controlled status of a tenancy in the context of Regulation 1016. Elizabeth Burns was the long-term tenant of a unit owned by Jason and Karen Mak. The Maks served an Owner Move-In (“OMI”) notice (pursuant to Cal. Civ., §1946.1 and Section 13.76.130A.9) on Burns, but then negotiated for her to move out in an agreement where she stated that the vacating was not because of the OMI notice, reciting that she was aware that the Maks could move in, sell, or re-rent at market rates.

No longer bound, in their minds, by the OMI restrictions, the Maks immediately re-rented to Alexander and Andrea Ziem, who ultimately brought a petition for determination of lawful rent, on the theory that the unit was still controlled at the previous rate, as Regulation 1016 creates an evidentiary presumption that, where a tenant vacates within a year after an OMI notice, they vacated because of the OMI notice.

The Maks argued against this position, relying on their agreement with Burns. They also asserted that Regulation 1016 was invalid to the extent it imposed vacancy control under Bullard v. San Francisco Residential Rent Stabilization Bd. (2003) 106 Cal.App.4th 488, which invalidated a provision of the San Francisco Rent Ordinance requiring landlords displacing tenants with an OMI notice to offer a “comparable unit” at the existing rent of the displaced tenant. (While Costa-Hawkins allows local agencies to monitor the bases for eviction, and this can sometimes include imposing rent ceilings following an eviction, this did not extend to the imposition of rent controls on a unit that was not the subject of the eviction. The court found this to accord with Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal.App.4th 1396, which invalidated the imposition of rent controls on new development by requiring a certain number of affordable units at regulated rental levels.)

The court was unconvinced by the Maks’ “subterfuge”. It distinguished Bullard, noting that, while regulating “comparable units” was a weak deterrent to avoid bad faith OMIs, Regulation 1016 was focused precisely on deterring the kind of conduct that would allow landlords to use threats of an OMI to cause a tenant to vacate a unit, in a manner that would avoid any of the restrictions imposed by the OMI provisions. The Ziems received a windfall here, but Regulation 1016 is designed to deter conduct, not necessarily protect the rent-controlled tenant.

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Proposed Law To Affect SF Affordable Housing Priority

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SocketSite reports on a proposed law that would alter the current priority in new affordable housing developments in the City. Currently, affordable housing preference operates on a lottery, which gives preference to, e.g., tenants who were recently evicted pursuant to the Ellis Act.

The new law would expand priority to tenants displaced by other non-fault evictions (as opposed to singling out the Ellis Act), and it would give priority in the neighborhoods from which the tenant was displaced.

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