AB 2364 – “All or Nothing” Ellis Act Withdrawal

Assemblymember Bloom’s AB 2364 would amend the Ellis Act to conjoin the dates of both “withdrawal from accommodations” and “re-offering units for rent” for multi-unit properties withdrawn under the Ellis Act.

Currently, the Ellis Act requires that landlords withdraw all “accommodations” at the same time. (Generally, this means that all rental units must be taken off of the rental market in the same effort, and each tenancy terminated (with some exceptions for parcels with multiple structures).) A 1999 amendment to the Ellis Act (SB 948) provided for an extension of this time period, and it split the particular “date of withdrawal” between standard tenancies and those with “elderly” or “disabled” tenants (as defined). This sometimes leads to different dates of withdrawal for different units in a property.

The Ellis Act also dictates how landlords may re-enter the rental market. Currently, displaced tenants get a “first right of refusal” for ten years, and any new tenants would benefit from the former, rent-controlled rental rate for five years.

AB 2364 seems eager to find a problem to solve. It would lock all “dates of withdrawal” from the latest date of extension (regardless of whether a particular rental unit had no elderly/disabled tenants). It would impose rent control on even vacant units, tracking from the last “bona fide tenancy” (evoking the days of strict vacancy control, before Costa-Hawkins), and it would extend all vacancy controls for ten years, instead of five. Finally, it would require landlords to return all rental units to the market at the same time (although, it is unclear what this would require as a practical matter, where an owner or a relative might be living in some of these units).

In short, AB 2364 would appear to prevent the piecemeal offering of new rental housing units to cities that supposedly need them, in an effort to marginally deter potentially bad actors. This appears to be a reaction to the case City of West Hollywood v. Kihagi, where the City of West Hollywood may be frustrated over efforts to penalize infamous landlord Anne Kihagi for violating a settlement agreement that required her to “comply with the Ellis Act”, when she actually re-entered the rental market correctly.

The amendment would also remove the six-month cap on punitive damages for violations of the Ellis Act, which actually would be a proper deterrent for bad behavior (given that some actors apparently viewed the penalties as a cost of doing business.)