Ballinger v. City of Oakland: Pacific Legal Foundation Sues City of “Relocation Assistance Payments”

The Ballingers, a military couple, leased their single family home in Oakland when they were reassigned to Washington D.C. for service. Anticipating they would return to the Bay Area within a few years, they negotiated a term lease that would become a month-to-month tenancy around that time. However, after they leased their home (but before they had planned to move back in), the City of Oakland instituted a “relocation assistance payment” regulation, requiring them to pay their tenants in order to terminate the tenancy and move back in.

The Pacific Legal Foundation represents the Ballingers in their lawsuit against Oakland, alleging that the ordinance constitutes a taking/exaction of private property and that it violates their rights under the Ellis Act.

However, relocation assistance payments that are reasonable have been upheld as consistent with the Ellis Act (cities are actually allowed to mitigate the adverse impacts of Ellis Act displacement, provided the payments do not impose a “prohibitive price“).

That said, the case law interpreting the mitigation payments addresses the Ellis Act only, not the 5th Amendment, so there may be something to the claim that taking money from a landlord to give to a tenant in exchange for allowing the landlord to retake possession of her property is an unconstitutional “taking”. And PLF may have to focus on the constitutional claims, rather than violations of state law, as their clients actually performed an “owner move-in” eviction rather than an Ellis Act eviction.


Oakland Now Regulates “Tenant Move-Out” Agreements

Oakland now regulates agreements between landlords and tenants to pay consideration to voluntarily vacate rental units (commonly known as a “buyout agreement”). Oakland joins Los Angeles, Berkeley, Santa Monica and San Francisco in enacting these regulations.

As with other jurisdictions, registration is a two-step process, where the landlord provides a pre-move out disclosure to the tenant and then executes a “negotiation disclosure” to file with the Rent Adjustment Program prior to commencing negotiations.

Tenants have a right to rescind for 25 days after execution (which may be as short as 15 days, if agreed to by the parties), and they must receive notification of the context of these negotiations and agreements, like the fact that they would receive relocation assistance payments for non-fault evictions, that rent on the open market is generally higher, and that buyout payments may be taxable.


Oakland To Enact “Tenant Move Out Agreement Ordinance”

The City of Oakland appears ready to join the short list of California cities regulating “tenant buyout agreements” – i.e., providing consideration to tenants to voluntarily vacate their rent-controlled rental units. Cities like San Francisco, Berkeley, Santa Monica and Los Angeles view these negotiations as inherently unequal, given that a landlord can threaten to perform an owner-move-in eviction or an Ellis Act eviction if the tenant doesn’t agree to accept money to leave.

The ordinance would add Section 8.22.700 to the Oakland Municipal Code. It would require disclosures of tenants’ rights, provide for a right to rescind (within 25 days, along with requirement to file the agreement in 45 days), and impose “vacancy control” constraints (the old rental rate) if a landlord threatened an OMI or Ellis eviction within 180 days. (Otherwise, a tenant move-out, even for payment, would be considered a “voluntary vacate” allowing a market rate increase.) The ordinance also imposes penalties for non-compliance, including enhanced penalties for non-compliant buyout agreements with elderly, disabled and catastrophically ill tenants.


Assembly Member Bonta Introduces AB 423 – Amendment to Prohibit Use of Ellis Act on SRO Units in Oakland

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Assembly Member Bonta has introduced AB 423 – an effort to amend the Ellis Act to prohibit the withdrawing of SRO (single room occupancy) buildings in Oakland. The Ellis Act already contains such a prohibition as to any city with at least a million residents and any city that is also a county. This latter restriction is perhaps a deft reference to the City and County of San Francisco – the only such city in the state of California. The amendment would specifically reference Oakland, which has a population under half a million.


Mountain View’s “Measure V” Gets Sidelined While Apartment Owners and Tenants Fight Over Rent Control Provision

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Mountain View’s Measure V seeks to impose rent control on pre-1995, multi-unit buildings (keyed to CPI but nonetheless between 2 and 5%). It also requires “just cause” for evictions. However, shortly after Measure V was approved by Mountain View voters, the California Apartment Association filed a lawsuit challenging its constitutionality, among other things, on the basis that it constitutes an “‘unlawful taking’ under the United States and California constitutions”.

Part of the dispute is that, in an effort to ease the burden of recent rent increases, Measure V rolls back rents to October 19, 2015 levels. It is difficult to imagine why this should be a problem, as retroactive rent ceilings were approved in the seminal case, Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129. Further, fighting over the end of 2015 as a benchmark may be futile, as this actually seems to have marked a turning point in the market. Birkenfeld also approved rent ceilings themselves, so long as they provided a “just and reasonable return”. The “CPI standard” employed by Measure V seems to have been sufficient in several Bay Area cities.

Further, a takings claim on the mere imposition of a rent control regime is a tough sell. While the eviction protections will remain intact during the challenge, a “physical takings” argument is unlikely to be successful where landlords have some method (like an owner move-in eviction) to recover possession for personal use (and the “just cause for eviction” provisions will go into effect notwithstanding the injunction). Meanwhile, “regulatory takings” require evidence of significant diminution in value. However, the disruptive effect of rent control on markets tends to actually increase the prices of rental property over time.

The most interesting thing about this lawsuit may be the allegation by Daniel DeBolt of the Mountain View Tenants Coalition (a group that promoted Measure V) that the City of Mountain View won’t be defending the measure against the California Apartment Association. Although, he has indicated that the Mountain View Tenants Coalition will defend the measure itself when it is allowed to intervene.


Several Bay Area Cities Approve Rent And Eviction Control Measures

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Voters in several counties across the Bay Area were asked to voice their opinions on rent and eviction control on election day. With the exception of San Mateo County, Bay Area residents enacted measures that will limit future rent increases and allowable reasons for evictions.

Costa-Hawkins prohibits local price control regulations on rental units constructed after February 1, 1995, as well as rental units that are separately alienable from others on the same parcel (i.e., houses and condos). Each of the local rent-control measures, therefore, sought to impose price controls (keyed to the consumer price index to maintain fair returns after inflation) for multi-unit buildings that existed prior to the enactment of Costa-Hawkins.

Costa-Hawkins does not affect eviction controls, and California has no other state eviction law, so several of these measures are able to impose “just cause for eviction” regulations on residential rental units, whether or not they are multi-unit and regardless of the year of construction.

San Mateo County:
Burlingame Measure R: Failed
Measure R would have imposed rent control on pre-1995, multi-unit buildings. Would have required “just cause” for eviction on all rental units.

San Mateo Measure Q: Failed
Measure Q would have imposed rent control on pre-1995, multi-unit buildings. Would have required “just cause” for eviction on all rental units.

Santa Clara County:
Mountain View had two competing rent control measures on the ballot – Measure W and Measure V – and voters passed the stronger of the two, Measure V.

Measure V imposes rent control on pre-1995, multi-unit buildings (keyed to CPI but nonetheless between 2 and 5%), and creates limits on evictions. It exempts single family homes and condos from both rent and eviction controls.

Contra Costa County:
Richmond Measure L: Passed.
Measure L imposes rent control on pre-1995, multi-unit buildings and imposes eviction control on all rental units.

Alameda County:
The City of Alameda had two competing rent control measures on the ballot – Measure L1 and Measure M1 – and voters passed the softer of the two, Measure L1.

Instead of rent control, Measure L1 requires that rent increases above 5 percent require mediation, which is binding as to pre-1995, multi-unit buildings. It also imposes eviction controls on all rental property.

Oakland Measure JJ: Passed.
Measure JJ amends Oakland’s Rent Adjustment Program to require city approval before raising rents above the standard CPI increase, and it would extend eviction controls to buildings constructed before 1995.


Measure JJ (2016): Oakland Asks Voters To Expand Eviction Protections and Let Rent Adjustment Program Review All Rent Increases


Oakland’s November ballot will ask residents whether to approve Measure JJ – an effort to further regulate rent increases and to expand eviction controls.

Oakland’s rental housing policy is effectuated through its Rent Adjustment Ordinance (Oakland Municipal Code §§8.22.010, et seq.) and the later-enacted Just Cause for Eviction Ordinance, i.e., “Measure EE” (§§8.22.300, et seq.).

Measure JJ would require that landlords must petition the Rent Adjustment Program prior to serving any rent increase notices that exceed those allowed by the Rent Adjustment Ordinance (i.e., in the event of a Costa-Hawkins increase).

It would also amend Measure EE, which previously exempted any “newly constructed” units created after its enactment. It would alter the “new construction” exemption to include any units built through December 31, 1995. This date happens to be the last date that Costa-Hawkins “grandfathered” in certain units/tenancies that it otherwise sought to exempt from rent control. However, it’s not clear from the City Council’s findings why they chose this date, as Costa-Hawkins (a state law) does not regulate eviction controls – an authority long held to be reserved to local governments.

Meanwhile, the petition prerequisite for rent increases could conceivably come into conflict with state law on noticing periods for rent increases. (See, Tri Cty. Apartment Assn. v. City of Mountain View (1987) 196 Cal. App. 3d 1283.)


Oakland Passing Rent-Increase Moratorium

The City of Oakland has passed an emergency interim ordinance to curtail the effects of rent increases. While Oakland’s rent ordinance already prohibited rent increases exceeding the allowable annual rate (keyed to CPI adjustments), landlords could impose rent increases exceeding this rate (up to ten percent) for things like capital improvement passthroughs. (After all, everybody likes living in apartments that have roofs.) Also, two and three-unit, owner-occupied buildings had been exempt. Under Ordinance 13360, the owner-occupied exemption and CPI-exceeding increases are eliminated during the 90-day moratorium period. The moratorium also prevents unauthorized increases for substantially rehabilitated buildings.

There is, perhaps, a difference of opinion about whether constraining housing supply (by creating price ceilings and disincentives for tenants to move) actually puts upward pressure on housing prices overall. And, for now, this moratorium prevents covered rent increases for only 90 days. Maybe the moratorium will meet falling prices in a cooling market and have the desired effect of preventing displacement. Or, if the prohibitions become permanent, maybe we can track their effects in the next housing crisis.


City of Berkeley Adopts Landlord-Tenant “Buyout” Ordinance

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The City of Berkeley follows Santa Monica and San Francisco in enacting regulations governing landlord-tenant “buyout” agreements.

Among other things, the new legislation requires disclosure to tenants of their rights under the ordinance, and it allows tenants to rescind an executed buyout agreement for up to thirty days. The ordinance was adopted on March 31, 2016 and becomes effective April 30, 2016. The Berkeley Rent Board has also generated required forms to comply with the ordinance.