San Francisco will not be allowed to require landlords who go out of the rental business to pay their evicted tenants as much as $50,000 to cover the higher rents they’ll face on the open market.
A ruling striking down a city ordinance that would have mandated the payments became final Wednesday when the state Supreme Court declined to review it.
The 2015 ordinance was an attempt by city officials to respond to a state law called the Ellis Act that allows landlords to evict all their tenants without having to show the usual legal grounds for eviction. Sponsored by the real estate industry, the 1985 law was intended as a check on local rent control, but allows local governments to require “reasonable” relocation assistance.
State courts have upheld a 2005 San Francisco ordinance that entitled displaced tenants to $4,500, adjusted annually for inflation, but the same courts found the city went too far with the 2015 measure, which never took effect.
Sponsored by then-Supervisor David Campos, the ordinance would have required landlords to pay former tenants the difference between their current rent and the market rate for a similar unit in the city for up to two years, up to a maximum of $50,000. Tenants would have to show they were using the funds solely for relocation costs and rents, and landlords who faced hardships could appeal to the city Rent Board to reduce their payments.
In a suit by property owners, lawyers for the city argued that the ordinance was authorized by language in the Ellis Act allowing local governments to protect tenants from “any adverse impact” caused by their landlord’s decision to go out of the rental business.
But the First District Court of Appeal, in a March 21 ruling, said the “adverse impact” on evicted San Francisco tenants was caused by the city’s “policy decision to impose residential rent control” and not by their landlords.
“That policy purposefully causes a tenant’s rent to be artificially below market rate, a gap that could be expected to increase with the length of the tenancy,” Presiding Justice Barbara Jones said in the 3-0 ruling.
She said the city ordinance was “a form of ransom which interferes and places an undue burden on landlords who simply seek to go out of the rental business.”
The city asked the state’s high court to “depublish” the ruling so it would not become a precedent for future cases. The court also said it would consider whether to review and overturn the ruling. But in a unanimous order Wednesday, the justices left the appellate decision intact.
The case is Coyne vs. San Francisco, S242044.