Surreal Estate – Page 6 – Costa-Hawkins.com

July 4, 2015July 4, 2015

Planning Commission “Figures Out” that It Can Impose Interim Controls on Market Rate Housing Developments

The “Mission Moratorium” failed to pass last month as an interim emergency ordinance and is headed to the ballot for November. However, it may have found new life in the meantime. The Planning Commission “figured out” that it can impose interim controls that would impose additional scrutiny on proposed developments – especially those that would demolish rent-controlled housing or community centers.

As for how to actually implement such a scheme, divorced from the emotion of the last effort, Commissioner Dennis Richards explained, “None of us are running for office or grandstanding… We can actually have a more rational discussion here”.

June 26, 2015July 26, 2015

Bay Area Homes Now Selling for Millions Over Listing

San Francisco Business Times reports that at least ten homes last year sold for at least a million over asking in San Francisco (with another 19 meeting this mark between Santa Clara and San Mateo counties).

The Business Times attributes this to the confluence of low inventory and the recent influx of “funny money” (i.e., the wealth of overnight multimillionaires), leading many agents to adopt “a strategy of egregious underpricing”.

June 23, 2015June 23, 2015

Proposed Legislation Would Tighten Eviction Protections in Rent Ordinance

Last week, the Board of Supervisors, led by Supervisor Kim, proposed legislation that would make several significant changes to the Rent Ordinance, providing clarity to some of the more vague articulations of tenant protections and also imposing some onerous burdens on landlords. For instance, while a termination notice must claim authority under one of the Rent Ordinance’s “just causes” for eviction, landlords would be required to state that the particular just cause is her “dominate motive” in terminating the tenancy. (No clarification on what happens if the landlord has two reasons.) Another would require landlords terminating tenancies under the Ellis Act to inform tenants of their rights to re-rent from successors-in-interest, as well as the current owners, if their units are ever placed back on the rental market. As Ellis Act termination notices generally take one year to ripen, this change could potentially void notices already in the pipeline.

The proposed amendment would also add a substantive change that would clarify the blurry line between municipal ordinances and Costa-Hawkins. The language of Costa-Hawkins provides that, where an existing tenancy is terminated following service of a (non-fault) termination notice or a notice of change to terms in tenancy, the unit loses its “de-control” status, and it becomes subject to rent increase limitations. This language was most likely included in the mid-90s so that there would not be a big rush to empty out rental units that were de-controlled-as-such, but which were grandfathered in by the existing rent-controlled tenancies that pre-dated Costa-Hawkins. In other words, the intent of the grandfathering provision was probably just to buffer the current tenancy, not to regulate subsequent tenancies in de-controlled units. And, while this is the stated interpretation of the Rent Board (see, AT150049), it is not supported by the plain language of Costa-Hawkins, which does not qualify the conditional protection. The proposed law would explicitly state that all new tenancies following a landlord’s notice would be subject to rent control, not simply the one immediately following the grandfathered tenancy.

June 21, 2015June 21, 2015

Curbed SF Continues To Explore How You Probably Can’t Afford To Live Here

Curbed SF – faithful digester of Zillow housing data – determines that a household would need to earn $126,480 per year – or $63.24 per hour – to be able to live anywhere in the Bay Area. (That number is $175,760 per year, or $84.50 per hour, for San Francisco specifically.) That would be considered “unaffordable” by the common measure of spending more than 30% of income on household expenses.

Curbed notes that these numbers are based on median rental values, and low-income earners generally don’t rent at median rates an any city. That said, Curbed has previously noted that, even where the exact numbers that emerge from these kinds of data are not necessarily accurate, their changes over time are, and this represents an increase of roughly 15% since the end of last year for San Francisco. The good news? This picture presents an elegant solution: just earn more money.

June 21, 2015June 21, 2015

City May Subsidize Historic Local Businesses

In another “first of its kind in the country” regulation of land use, Supervisor Campos has proposed a ballot measure to allow the City’s “legacy business fund” to support local small businesses distinguished by the Historic Preservation Commission.

The City’s contribution is in the form of a “grant” for older businesses up for lease renewals (of up to $22,500 per year), so it probably does not run afoul of California’s underdeveloped state-wide prohibition of commercial rent control.

June 21, 2015

SF May Gain Right of First Refusal for Land Sales – First of Its Kind in the Country

San Francisco Business Times reports on a proposal by Supervisor Campos for “right of first refusal” for San Francisco to purchase property in The Mission or near BART stations. Such a condition to private land sales would be the first of its kind in the country.

June 20, 2015July 10, 2015

Disclosure of “Do Not Film” Documents

SocketSite reports on an ordinance unanimously passed by the Board of Supervisors that would require the transfer tax of real property to be recorded on the face of the instrument conveying it. This number is relevant because it can be used to calculate the sales price, and some buyers of high-priced real estate in San Francisco have been attempting to keep their purchase prices a secret.

Meanwhile, other San Francisco denizens might shout their ability to purchase property from their rooftop…

June 20, 2015June 20, 2015

City “Complying” with New Ellis Act Enhanced Relocation Assistance Law

Under the new enhanced Ellis Act relocation assistance payment law passed by the Board of Supervisors last month, a landlord seeking to withdraw rental units from the rental market must pay up to $50,000, per rental unit, based on the “market rate differential” that the displaced tenant faces on the open rental market.

To determine this number, the new law requires the City Controller to provide market rate data for studios, one-bedrooms, two-bedrooms and three-bedroom apartments. This number, minus the tenant’s rent, times 24 months is the new “relocation payment”.

A previous attempt by the Board of Supervisors to require that landlord’s pay two years worth of rent subsidy was overturned last October in Levin v. CCSF. In an apparent effort to address the concerns of Judge Breyer, the Board of Supervisors capped the new relocation payment (which, under the previous version, could have easily been six-figures) at $50,000, and they require that a tenant provide their landlord with a signed declaration where they promise to use the funds for housing after they’re displaced.

The new law came online on June 14, 2015, and it required the Controller and the Rent Board to produce market data and the Declaration form, respectively, by June 19, 2015. While the Rent Board’s official position at the beginning of last week is that the City was not required to comply with the law, pending its appeal of Levin v. CCSF, it released this statement on Friday, in time to provide the necessary documents and data.

However, they are offered “for informational purposes only”. While there wasn’t a Schoolhouse Rock episode specifically about what happens when your city legislature passes a sequel to a law under review by the 9th Circuit, the subtext here seems to be that a landlord should comply anyway, unless and until the new law is also successfully challenged in the judicial branch.

June 15, 2015July 8, 2015

Board of Supervisors Passes Enhanced Relocation Payments for Ellis Act; City Attorney Declines To Enforce; Rent Board Waiting Patiently

The City of San Francisco recently passed Ordinance 68-15, requiring enhanced relocation payments for non-fault evictions based on the Ellis Act – their second attempt in two years to conform required relocation payments to the differentials in rental rates that displaced tenants will face on the open market. This attempt is an effort to address the concerns of the courts in Levin v. CCSF and Jacoby v. CCSF, each of which recently invalidated the prior attempt.

The new law, operative June 14, 2015, was bizarrely made retroactively applicable as of June 1, 2014, by grafting the new law onto the old framework. Despite the retroactivity, the City has chosen not to enforce the new law, pending the outcome of their appeal on the prior law – although it is not clear why. As a result, the Rent Board, which is required to provide “tenant declaration” forms for landlords to give to tenants prior to initiating an Ellis withdrawal, has no declaration forms available to allow landlords to comply.

June 11, 2015

San Francisco To Close Group Housing Loophole

Group housing developments have been on the rise in San Francisco lately. They provide two incentives for developers: smaller units mean more tenants/rental income and they have been exempt from San Francisco’s Inclusionary Housing Program, which requires developers to either pay money or create a specified number of below market rate units as a condition to creating the market-rate ones.

SocketSite reports that the City is now aiming to close that loophole. (At least one current developer of group housing units, Artthaus, says it would not be dissuaded from the business model as a result of an inclusionary housing requirement – and there seems to be a willingness to trade square footage for affordability, with a fair number of “Micro Units“.)