Contentious Hearing in Challenge|to San Francisco’s Rent Law

     SAN FRANCISCO (CN) – San Francisco is trying to use landlords to fix its affordable housing problem, the lead attorney challenging the city’s rent ordinance as unconstitutional said outside the city’s Federal Courthouse on Monday.
     “It’s everyone’s job to fund the affordable housing programs in this city and not foist it on the backs of property owners,” J. David Breemer said.
     His clients are Daniel and Maria Levin, a couple who, under a law allowing them to get out of the rental business, must pay their tenant $117,000 to move out of the two-unit building they bought in 2008.
     The Levins say they never wanted to be landlords and immediately informed the woman, who had been living in the first-floor unit since 1988, that they planned to remodel the building and use both units themselves.
     The Levins moved into the one-bedroom top floor unit, and after the tenant protested their attempts to remodel, the Levins decided to take the ground-floor apartment off the rental market, through the 1985 Ellis Act, which allows landlords to evict tenants if the landlord wants to get out of the rental business.
     The Levins claim they paid the tenant, Thina Holman, $8,000 under old tenant payment laws.
     But under a San Francisco ordinance that took effect in June, now they must pay her the difference between her old rent of $2,479 a month and the price of comparable housing in the city for two years.
     Co-plaintiffs in Levin’s case include Park Lane Associates, which owns a 33-unit building, the San Francisco Apartment Association, and the Coalition for Better Housing.
     Park Lane claims it will have to pay the tenants of 15 of its units more than $1.4 million.
     As the trial began Monday, U.S. District Judge Charles Breyer said he wanted additional briefing from the city on whether its goal in enacting the ordinance of helping renters find housing in an increasingly expensive market justifies the means in requiring landlords to pay tenants massive amounts to vacate their property.
     Breyer said the Nollan-Dolan test is central to the case, and that the city has not addressed its merits, calling the test, “a serious challenge to the ordinance.”
     Under Nollan-Dolan, to survive a challenge under the Takings Clause, the ordinance must have an essential nexus to a legitimate public interest and be roughly proportionate to its impact.
     Breemer said: “The specific legal question has to deal with this means-end question. Assuming it advances a legitimate purpose, are the means appropriately tailored to the end?”
     Arguing before Judge Breyer on Monday, City Attorney Christine Van Aken said the ordinance is helping to mitigate the loss of rent control on tenants, a direct impact of the Ellis Act.
     “When a landlord evicts a tenant, he or she is removing from that tenant the protection of rent control. The landlord is exposing those tenants to market rates. San Francisco has said to landlord you must at least mitigate two years of that impact,” Van Aken said.
     Breemer countered: “The only direct impact is the tenant must find another place to live.”
     Breyer said: “They’re saying more than that; they’re saying the tenants are losing rent control. The tenant loses the protection of rent control.”
     Breemer said: “Maybe the impact is that tenant loses rent-control housing and the city is trying to put the equivalent of rent control on the Levins’ back. There’s still a lack of accountability. The city will never know if the money is used for housing. They’ll never know if the people get it will really need it for housing or will stay in San Francisco. Even if that’s rational, that’s not the nexus between the impact of what they’re doing. To say you have to subsidize two years, why not ten? Why not in perpetuity? Why not pay for someone else to live somewhere forever?”
     Breyer turned to Van Aken: “Why isn’t it tied to the tenant’s life expectancy?”
     She replied: “We do not lose because we do not compensate tenants for every adverse impact. It’s not a reason to strike down this ordinance.”
     Van Aken added: “The Ellis Act does allow landlords to go out of business, but there is no constitutional requirement that there be an Ellis Act.”
     Breyer laughed.
     “Really?” he said. “You say the government can require you always be a landlord? That’s like saying, constitutionally, you always have to be a lawyer. That would be an awful thing to say.”
     Laughter rang out through the courtroom.
     Breyer seemed interested in the tenants’ financial means.
     “There is no means test with respect to the tenants. That is to say, if I may use the ludicrous example, Warren Buffet gets the same payment as Ms. Holman. One could make the argument this is going to help her relocate, but we don’t know if she’s in need of help or not in need of help. Does that make any difference at all to the analysis?”
     “No, that makes no difference,” Van Aken said. “Rent control serves a public purpose and is not a taking. There is no requirement that rent control be means tested.”
     At one point in the proceedings, Breemer suggested that a better law would be one that requires landlords to give the $117,000 to a city affordable-housing program.
     Van Aken’s response, poking fun at plaintiffs’ attorneys’ Pacific Libertarian Foundation’s libertarian principles, brought laughter from the courtroom packed with spectators.
     “There’s no question that if Levins were being required to pay $117,000 to the city’s affordable housing program that we wouldn’t still have a lawsuit from the Pacific Legal Foundation,” she said.
     Outside the courthouse, former SF Bay Guardian editor Tim Redmond questioned Breemer on his proposal that that Ellis Act evictees, who get preference for affordable housing, should just seek help from city programs.
     “Realistically, the waiting list is eight years,” Redmond said. “There’s not nearly enough housing for tenants being evicted under the Ellis Act. It’s not there. So it’s not as if I get evicted under the Ellis Act, I just walk across the street and get affordable housing.”
     “Why is that the Levin’s fault?” Breemer replied. “That’s important to the legal question. I’m not just saying that facetiously. The Levins are not causing the housing crisis, they’re not causing the rent control problem, they’re not causing Google, they’re not causing the reason why the rents are so high, so why are they being forced to solve that problem?”
     Throughout the proceedings, Daniel Whittaker sat snorting and shaking his head at Breemer’s arguments that landlords shouldn’t have to pay tenants in perpetuity, and that the ordinance lacks controls to ensure millionaire tenants buying sports cards with their payouts.
     In the hallway, Whittaker said he’s been fighting his own Ellis-Act eviction battle for over a year.
     “This affects me personally. And I know so many people who are literally terrified, every day, that it could happen to them,” he said.
     “The whole intent of that portion of the Ellis Act was to give displaced tenants whose lives were being completely torn apart and completely upended – a small percentage who might even be homeless because of it – giving them a chance to stay in San Francisco, and giving them some compensation for almost destroying their lives, when we’re talking situations where landlords are making so much money.”
     Whittaker said the ordinance is essential, as the smaller payments landlords are required to make under the Ellis Act are not enough to rebuild his life.
     “I’ve been in my place 19 years. This pay barely pays for first and last months rents, it doesn’t pay deposit, it doesn’t pay for moving expenses, it doesn’t pay for completely upending my life and the stress I’ve had to go through for a year,” he said. “It certainly isn’t going to cover any continuing rent, and my landlords are making out like bandits.”
     Breyer ordered the city to file its briefing by Friday. The Pacific Legal Foundation’s response is due Oct. 14.

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