Landlords Win Appeal in San Francisco Rental Market Fight

(CN) – A California appeals court reversed a lower court decision with implications for the property rights of landlords in San Francisco on Wednesday.

The California First Appellate District ruled in favor of the Small Property Owners of San Francisco Institute, which argued that San Francisco’s law requiring landlords to wait ten years after evicting tenants before improving their property was illegal.

“The ordinance in SFAA rather than regulating the particulars of a landlord’s proposed merger of a residential unit prohibits a landlord withdrawing a residential unit from the rental market from merging the unit with another unit for 10 years,” the three-judge panel wrote. “In doing so, the ordinance imposes a penalty on the very class entitled to protection under the Ellis Act—to wit, landowners seeking to exit the residential rental business. As such, the ordinance is indeed invalid.”

The Ellis Act is a California law passed in 1985 allowing landlords to exit the rental market and improve their property, so long as they don’t put the property back on the market.

In the throes of a severe housing affordability crisis, San Francisco County Supervisor John Avalos sought to craft regulations to dissuade the owners of non- conforming rental units – typically more affordable – from exiting the market.

He came up with a ten-year waiting list with the hopes of reducing Ellis Act evictions.

The modification to the planning code passed unanimously in December 2013 without public comment.

The institute’s failure to protest the ordinance during the county’s administrative process was a major reason the lower court ruled against it during summary judgment.

However, the state appeals court found that the ordinance’s clear violation of existing state law was enough to prevent its implementation.

“We conclude that because it imposes a 10-year waiting period for alterations of properties that have been withdrawn from rental use under the Ellis Act, Planning Code section 181, subdivision (c)(3) conflicts with, and is preempted by, the Ellis Act,” the panel wrote.



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