Anti-Ellis Act bill dealt major blow in Assembly

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UPDATE: Leno quits pushing for anti-Ellis Act bill 

Before a room brimming with property-rights advocates, an Assembly committee Wednesday rejected Sen. Mark Leno’s anti-Ellis Act bill.

The Assembly Housing and Community Development Committee voted 4-3 on June 18 against Senate Bill 1439, possibly sinking the legislation for good.

Helping derail Leno’s bill today were dozens of San Franciscans, many holding up neon paper signs condemning SB 1439. The committee also heard from the California Apartment Association, as well as a landlord whose rights would be undermined by Leno’s proposal.

Despite being amended after narrowly passing the Senate last month, SB 1439 still threatens to greatly weaken landlords’ property rights, taking particular aim at the Ellis Act, a landmark 1985 law that bars local governments from making property owners stay in the rental housing industry.

The bill would force many rental property owners in San Francisco to wait at least five years before removing their units from the market — even if losing money month after month.

Although voting against the bill, the Housing Committee granted Leno reconsideration — meaning he can request another vote. The senator, however, faces some administrative hurdles. To keep SB 1439 alive, Leno would have to obtain rule waivers to get both the Housing and Judiciary committees to meet – and pass his bill — before the Legislature’s June 27 deadline.

It wouldn’t be the first time Leno has exhibited fast political footwork to rescue SB 1439.

The bill was all but dead May 28 when it failed on the Senate floor. The next day, however, Leno promised changes to the legislation, persuading three senators to change their votes and send SB 1439 to the lower chamber.

The amendments that followed would exempt from the five-year ownership requirement an owner who is a “natural person,” owns no more than two properties and no more than four residential units. A natural person excludes family trusts, partnerships and corporations — mechanisms that the majority of small-property owners use to hold real estate. The bill clearly still poses a threat to mom-and-pop owners.

While the bill would apply only to San Francisco, it could have statewide ramifications. Los Angeles has already expressed interest in pursuing legislation similar to SB 1439.

Before the Ellis Act, rent-controlled cities — Santa Monica in particular — were forcing landlords to stay in business, even if they were losing money or experiencing other hardships. The Ellis Act has blocked this type of government intrusion, providing a veritable escape hatch for owners who can no longer thrive – or even survive — in rent-controlled communities.

The Ellis Act isn’t just for property owners. The act requires that landlords provide relocation assistance to displaced tenants and abide by specific notice periods and deed restrictions on the future use of the property.

“When an owner Ellises the building, there are significant protections already in place (for tenants),” said Debra Carlton, CAA’s senior vice president of public affairs, whose quote appears in this San Francisco Chronicle story about Wednesday’s hearing.

Photos by Mike Nemeth

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