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Judge Tosses City's Ellis Payout Law

Scott Lucas | October 22, 2014 | Story Politics

A bad week for San Francisco's progressive Democrats is threatening to turn into a bad month. (See: here, here, and here, but not here.) As we predicted almost a year ago, the city's political efforts to soften the effects of the Ellis Act have failed.

In the latest in a string of blows, a federal judge has tossed out a law, authored by Supervisor David Campos, that would have mandated big payouts to renters evicted by landlords under the state's Ellis Act, which allows property owners to exit the rental market.

According to judge Charles Breyer, the law amounted to an unconstitutional violation of property rights. Campos's bill would have mandated that in the case of Ellis Act evictions, the landlord be forced to pay the difference in rent between the existing apartment and one of comparable value for two years. Thanks to rent control, that number could have reached six figures in many cases, making it economically infeasible for landlords to evict at all.

Under current law, landlords pay tenants $4,500 after invoking the Ellis Act, a figure that Breyer said was roughly comparable to moving costs, and remains in place. But in his decision, the Clinton-appointed judge said that, "The ordinance requires an enormous payout untethered in both nature and amount to the social harm actually caused by the property owner’s action." The judge also noted that the number of Ellis Act evictions—of which there have been about 200 in the last year out of the city's stock of 230,000 rental units—have little effect on the broader issue of affordability.

Similar efforts to restrict the use of the Ellis Act in Sacramento by Senator Mark Leno and Assemblymember Tom Ammiano have failed to pass, leaving San Francisco in largely the same policy situation as it was when the most recent set of efforts began last year. However, there is still a chance that the Campos law will go into effect. The city's attorney, Dennis Herrera, has until Friday to file an appeal. And Campos—who is currently running for the State Assembly—has already seized on the ruling as an argument in favor of his election.

Update: On Wednesday afternoon, City Attorney Dennis Herrera announced that he would be filing an appeal to the ruling. In a statement, he blasted the judge's decision, saying, "The district court's decision is contrary to cases interpreting the U.S. Constitution. San Francisco is facing a housing affordability crisis that's historically unprecedented, and our tenant relocation law serves a legitimate and lawful public purpose in helping tenants to adjust to the loss of rent control and mitigating the harms of displacement."

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