Infamous San Francisco Landlord Anne Kahigi Sent to Jail for Contempt

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WeHoVille.com reports that infamous landlord Anne Kahigi has been ordered to jail for five days for violating an injunction in a case by a former tenant of one of her West Hollywood apartments, who is suing her for violating the Ellis Act. The former tenant’s lawsuit alleges that she violated the Ellis Act by re-renting the property.

The Ellis Act – which allows property owners to terminate tenancies in a building by “going out business” – actually does permit re-renting under certain circumstances (like offering the unit to the displaced tenant at the rent-controlled rental rate). However, re-rental within two years may subject the landlord to prosecution by the city and liability to the tenant.

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First District Affirms San Francisco Housing Court on Small Property Owners’ Challenge to Enhanced Relocation Assistance Payment Ordinance: Coyne v. CCSF

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“We conclude the prohibitive price standard is the appropriate standard to determine conflict preemption under the Ellis Act. It is the measure appellate courts consistently adopt to determine if a challenged ordinance contradicts the state law.”

Today, Division Five of the First District Court of Appeal affirmed Judge Quidachay of the San Francisco Housing Court, who previously held that San Francisco’s enhanced relocation assistance payment ordinance was not a “reasonable” means of mitigating the impact of tenant displacement by the Ellis Act. In 2015, plaintiffs, including individual landlords and the Small Property Owners of San Francisco, argued in Coyne v. CCSF that an enhanced relocation assistance payment regime was preempted by the Ellis Act. The payment amounted to a subsidy of a tenant’s new rent for two years after displacement under the Ellis Act.

Division Five affirmed the ruling, but determined that the correct standard was whether a local ordinance places a “prohibitive price” on a landlord’s ability to exit the rental market. “Like provisions in past City-enacted ordinances which have been invalidated, the City’s Rental Payment Differential obligation places conditions on a landlord’s right to go out of business that are not found in the Ellis Act. The Ellis Act contains no requirement that obliges a landlord to pay their former tenants future rental subsidies so that they can leave the residential rental business.” Division Five agreed with its colleagues in Division Three, which recently applied the “prohibitive price” standard to invalidate San Francisco’s prohibition on the merger of rental units for 10 years after an owner has invoked the Ellis Act.

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Costa-Hawkins.com Coverage of AB 1506 Featured in Small Property Owners of San Francisco March 2017 Newsletter

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Justin Goodman’s thoughts on AB 1506 – an assembly bill aimed at repealing the Costa-Hawkins Rental Housing Act – were featured in the March 2017 Newsletter of the Small Property Owners of San Francisco.

The non-profit SPOSF Institute describes its mission as providing owners of small rental properties in San Francisco with the tools and information necessary to conduct business successfully in a difficult regulatory climate, through educational programs, publications, and workshops that seek to help members better understand their rights and obligations, how to work constructively with city and state officials, and how to deal effectively with their tenants. SPOSF also seeks to protect the rights of small property owners against unfair and burdensome regulations through legal advocacy.

SPOSF holds monthly meetings at St. Mary’s Cathedral, located at 1111 Gough Street in San Francisco. You can join SPOSF by clicking here. Members have access to the full monthly newsletter.

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AIMCO Sues Airbnb Over Encouraging Lease Violations

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The Wall Street Journal reports that Apartment Investment & Management Co. (AIMCO) is suing Airbnb, alleging that Airbnb is helping their tenants breach their leases.

According to AIMCO, “It is not acceptable to us that Airbnb actively promotes and profits from deliberate breaches of our leases, and does so in utter disregard of the disrespectful and unsafe situations created for our full-time residents and their families”.

Airbnb’s response, utterly devoid of histrionics, championed the voice of their subjugated “hosts”, speaking truth to power, despite no ascertainable pecuniary interest in sticking its neck out, humbly urging that, “This attack on the middle class by powerful interests is wholly without merit”.

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Assembly Members Chiu, Bonta and Bloom Introduce AB 1506 – Attempt To Repeal Costa-Hawkins

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On February 17, 2017, Assembly Members Chiu, Bonta, and Bloom introduced AB 1506, an effort to repeal the Costa-Hawkins Rental Housing Act – a state law that places strict limits on a city’s ability to impose rent control on housing.

Prior to Costa-Hawkins, rent control ordinances had long been held to be a valid exercise of a city’s “police power” – the ability to regulate the health and safety of their residents – and five California cities (Berkeley, Santa Monica, Cotati, East Palo Alto, and West Hollywood) had strict rent control ordinances, imposing what is known as “vacancy control” on empty units even after a tenant voluntarily vacated. In 1995, State Assembly Member Hawkins introduced AB 1164 (with State Senate Member Costa as a co-author), advancing what they saw as a “moderate approach to overturn extreme vacancy control ordinances [that] unduly and unfairly interfere with the free market”.

Costa-Hawkins achieves several forms of decontrol on local price ceiling regulations. It prohibits rent control on new construction and on single-family homes and condos (subject to certain conditions and limitations). It also prevents vacancy control by prohibiting cities from setting prices on vacant units and by allowing landlords to impose market-rate increases on subsequent occupants, once the last “original occupant” has vacated.

While Costa-Hawkins seeks a middle ground between inflexible price controls, on the one hand, and “rent-gouging” and displacement on the other, some lawmakers have expressed concern about the consequences of vacancy decontrol in tough situations. (For instance, Supervisor Jane Kim has proposed a “compassion clause” to protect the surviving spouses/partners of recently deceased, rent-controlled original occupants.) However, Costa-Hawkins has now been on the books for over two decades, and a sudden repeal would wash away the existing case law and local regulation that navigate these competing interests.

As with the recent proposed legislation by Assembly Members Chiu and Bloom to amend the Ellis Act (AB 982), the purpose of AB 1506 is unclear. Costa-Hawkins expressly allows cities to impose limits on evictions. Local real estate blogs, like SocketSite.com, have recently reported that rental rates in San Francisco are dipping back down to 2014 levels. So, rather than ward off climbing prices, this kind of gesture would merely seem to further cement protections for incumbent tenants, as compared to anyone else in the market for a rental unit. It may also have unintended consequences, where landlords rush to invoke the Ellis Act, which allows its own form of vacancy decontrol if a property goes back onto the rental market.

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Board of Supervisors Seeks To End Transient Use of SRO Units

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San Francisco may soon prohibit transient use of residential hotels (also known as “SRO” (single room occupancy) units). Sponsored by a swell of Supervisors – Aaron Peskin, Jane Kim, Ahsha Safai, Jeff Sheehy, Malia Cohen, Hillary Ronen, Norman Yee, and London Breed – the proposed Ordinance, if passed, would amend Administrative Code, Chapter 41 (i.e., the Hotel Conversion Ordinance) to prohibit the “conversion” of SRO units to Tourist or Transient Use, defined as “any use of a guest room for less than a 32-day term of tenancy by a party other than a Permanent Resident”.

By hosting guests instead of providing housing to residents, SRO owners can avoid the creation of a tenancy and the application of local eviction and rent controls to the units.

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Los Angeles Introduces “Cash for Keys” Amendment To Regulate Tenant “Buyout Agreements”

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Effective January 25, 2017, the Los Angeles City Council enacted Ordinance 184673, amending the Los Angeles Municipal Code §151.31, to require certain disclosures by landlords to their tenants concerning their rights in “cash for keys” agreements.

Landlords must now provide a notice informing tenants that they do not have to accept a “buyout offer” and that a landlord may not retaliate against them for declining, that they may consult an attorney or the city, that they have 30 days to rescind a properly executed agreement, and they may rescind an improper one at any time. Notices must also be filed with the city.

Los Angeles now joins Berkeley, Santa Monica and San Francisco in regulating buyout discussions between landlords and tenants. Landlords often find these agreements to be an attractive alternative to non-fault eviction regulations, which require noticing periods and relocation assistance payments, and which may lead to relinquishing certain land use rights (e.g., approval for condominium conversion) and to the uncertainty of litigation.

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Assembly Members Chiu and Bloom Introduce AB 982 – Extending Withdrawal Date to One Year for All Occupants

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This week, Assembly Members Chiu and Bloom introduced AB 982, an amendment to Section 7060.4 of the Ellis Act, dictating that, when a property is withdrawn from the residential rental market under the Ellis Act, the termination date of all tenancies is one year from the date of filing the “notice of intent to withdraw” with the city.

Currently, the default withdrawal date is 120 days, and qualified tenants may claim an extension to a full year if they are at least 62 years old or are disabled. The amendment would simply eliminate the “qualified claim” requirement, providing one-years’ notice for all occupants.

If the amendment passes, this would be the second time the withdrawal date has been changed since the Ellis Act was enacted in 1986. Originally, the Ellis Act provided for 60 days’ notice of termination, in line with the maximum period of notice of termination for periodic residential leases under state law.

Effective January 1, 2000, SB 948 (1999) required 120 days’ notice, unless a qualified tenant claimed an extension, in which case the property owner had to comply with additional conditions for withdrawal of the property, including the extension of the withdrawal date to a full one-year for rental units with a qualified tenant.This amendment would essentially restore the original text, without the conditions and the variable withdrawal date.

The logic of this amendment is somewhat opaque, given that the class of tenants that would be protected is the one that is per se less susceptible to the adverse impacts of displacement (as they are neither disabled nor elderly). Time will tell whether Assembly Members Chiu and Bloom find the political will for this amendment.

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Residential Rent and Eviction Control Resources