Anti-Ellis Act bill stalls in Housing, Transportation Committee

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A bill that threatens to undermine a landlord’s right to leave San Francisco’s rental housing business stalled Tuesday in its first committee hearing.

The Senate Transportation and Housing Committee voted 6 to 5 against SB 364 by Sen. Mark Leno, D-San Francisco.

Leno requested and was granted reconsideration, meaning it’s still possible that he’ll get the necessary six yes votes to advance the bill to the Judiciary Committee.

The bill, opposed by the California Apartment Association during Tuesday’s hearing, takes aim at the Ellis Act, landmark legislation passed in 1985 that bars local governments from making property owners stay in the apartment business.

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.

SB 364 would make many rental property owners in San Francisco wait at least five years before removing their units from the market.

Indeed, by increasing its housing stock, San Francisco is proving it can address its housing shortage without resorting to bills like SB 364 that undermine property rights.

The bill would offer no recourse for landlords operating at a loss or needing to leave the business for family reasons.

Vince Young, who testified Tuesday, is one such owner. In 2013, Young and his father, who has health issues that keep him from living independently, bought a seven-unit building in San Francisco so that they and other family members could occupy some of the units. But Young’s tenants are refusing to move out unless Young pays them hundreds of thousands of dollars, something his family can’t afford.

“Without the ability to move my father and myself into the property, I would not have purchased it,” Young said. “If SB 364 were to become law, we would be forced to remain in business as a landlord for another five years before we would be able to move into our own property.”

SB 364 is modeled after SB 1439, which Leno carried last year and which met defeat at the hands of CAA. SB 364 is co-authored by Assemblyman David Chui, D-San Francisco, and like its predecessor, is sponsored by San Francisco Mayor Ed Lee.

The bill came at a time when Ellis Act evictions have seen a steep decline in San Francisco, which Lee acknowledged Tuesday, and The City is seeing an impressive housing boom.

While offering testimony, both Leno and Lee discussed San Francisco’s progress in adding residential units, despite its limited geography.

“The mayor will tell you how many tens of thousands of units we are currently building, and about a third of them, unlike any place else in the state, will be below market rate,” Leno said, addressing a hearing room packed with opponents and proponents of the bill, as well as several members of the media.

By encouraging residential development, San Francisco is boosting supply, lessening demand and creating economic conditions for rents to stabilize, and perhaps dip, on their own.

CAA applauded The City’s encouragement of development.

“We do appreciate the work that the mayor has done,” Debra Carlton, senior vice president of public affairs for CAA, said. “We believe that is where the focus should be —  on the production of rental housing.”

Indeed, by increasing its housing stock, San Francisco is proving it can address its housing shortage without resorting to bills like SB 364 that undermine property rights.

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Tagged: San Francisco Apartment Association