The SF Examiner reports that Sinbad’s restaurant, a decades’ old waterfront icon, may soon serve its last shrimp cocktail. The restaurant’s landlord, the Port of San Francisco, is expecting the restaurant to vacate by March 21, 2015, as the San Francisco Bay Conservation and Development Commission plans to demolish Pier 2 that month, allowing construction to expand the ferry terminal in 2016.
That is, unless the Stinson brothers – the restaurant’s owners – are successful in evoking the “no harm, no foul” doctrine, to continue operating until the City breaks ground on construction.
Charles Stinson was also briefly involved in an attempt to reopen a restaurant in the San Francisco historical landmark, Julius Castle, at the top of Telegraph Hill. That effort resulted in, among other things, the decision Julius Castle Restaurant Inc. v. Payne (2013) 216 Cal.App.4th 1423, where the First District Court of Appeals analyzed fraud in the inducement of commercial lease agreements.
Last week, the United States District Court for the Northern District of California invalidated an amendment to the San Francisco Rent Ordinance requiring an increase to the existing relocation payments owed to tenants in non-fault evictions pursuant to the Ellis Act. The new, enhanced payments were calculated based on market rate differentials – the difference between the tenant’s rent-controlled rental rate and the cost of a comparable unit on the open market. In some cases, this number reached six figures per unit.
Finding that the new law constituted a monetary exaction, prohibited under the Takings Clause without the payment of “just compensation”, Judge Breyer found that there was no “essential nexus” between the right to change the use of property (i.e., to no longer allow rentals) and there was no “rough proportionality” between the costs a displaced tenant faced on the open market and the direct consequences of a decision by the landlord to go out of the rental business. (By contrast, challenges to the previous relocation payment scheme, requiring a payment based on the cost of first months’ rent, last months’ rent, and security deposit at a new rental unit, have been upheld as comporting with the Ellis Act.) The City is expected to appeal the decision to the 9th Circuit.