The number of rent-controlled San Francisco tenants receiving eviction notices is rising sharply, the latest evidence that the city’s economy continues to drive the displacement of long-term residents.
Since March, the number of eviction notices filed per month with the San Francisco Rent Board is up 32 percent compared with the previous three years’ average, while owner move-in evictions are up 131 percent. During that period, the average number of evictions has climbed from 151 per month to more than 200, while the number of owner move-in evictions per month has jumped from 23.7 to 54.7.
The reasons would seem obvious. Rents are through the roof, and investors are gobbling up multifamily buildings at unheard-of prices — apartment complexes with more than 10 units sold for an average of $357,000 per unit during the first half of 2015, nearly double the $180,000-per-unit values seen in 2011. Investors paying that much money for apartment buildings have a huge incentive to evict tenants paying below-market rents.
But the sharp increase since March is prompting attorneys for both landlords and tenants to argue that the spike is a result of something else: a new pro-tenant law regulating buyout deals between landlords and tenants.
On March 7, an ordinance went into effect that requires property owners to disclose all cash settlements with tenants. It mandates that the landlord register with the San Francisco Rent Board at the start of buyout negotiations. It also imposes a 10-year ban on condo conversions in units where a buyout has taken place.
Average buyout: $43,000
Through July 13, 47 buyouts were completed, with an average settlement of about $43,000. The highest buyout was $310,000 and the lowest was $3,000. More than half were between $25,000 and $45,000, although 11 were above $50,000 and six were over $70,000.
Attorney Joe Tobener, who represents tenants, said he sees a direct cause and effect between the legislation and the jump in eviction notices, especially in two-unit buildings, which are the top targets for condo conversions. Before the legislation only buildings where evictions had occurred were barred from condo conversions. Now that both evictions and buyouts result in a condo conversion ban, property owners are choosing to save their money and skip the negotiating table. In addition to owner move-ins, the most common types of evictions in San Francisco are for breach of contract and nuisance.
“There is no incentive to buy someone out versus filing an eviction notice,” Tobener said.
Landlord attorney Andrew Zacks, who opposed the buyout legislation, agreed. He said property owners are reluctant to disclose the details of financial deals with tenants.
“I can tell you that the net effect of the buyout legislation has caused there to be more evictions,” said Zacks. “Before, when a landlord bought a tenant out, one of the things they were willing to pay for was confidentiality and privacy. A lot of my clients would prefer to negotiate, to sit down and work something out. But because of the legislation they just go ahead and file for eviction.”
For some tenant advocacy groups the idea that landlords are choosing eviction over buyouts is not a particularly bad thing. The law, sponsored by Supervisor David Campos, was meant to to shine a light onto the little-understood world of how property owners pay cash to get rid of low-rent apartment dwellers. Backers of the legislation argued that landlords often represent buyout offers as an alternative to eviction — a carrot-and-stick approach that allows property owners to avoid the drawn-out eviction process.
Scott Weaver, spokesman for the San Francisco Tenants Union, said rent control advocates “don’t like buyouts because people get ripped off most of the time.”
‘Getting bamboozled’
Former District 3 Supervisor Aaron Peskin, who is running to recapture his old seat, said “whether they get bought out or evicted is kind of apples and apples.” He said it’s better to know what is happening in the world of buyouts, even if it means more landlords going for eviction.
“I think it’s worth knowing who is getting bamboozled,” he said.
Meanwhile, several groups representing property owners, led by the San Francisco Apartment Association, have filed a lawsuit in Superior Court seeking to overturn the buyout legislation.
The plaintiffs say that the ordinance violates the landlords’ and tenants’ right to free speech, because certain forms must be filed before they can talk to each other, and their right to privacy.
Janan New of the San Francisco Apartment Association argues that the buyout legislation hurts tenants more than landlords because it is the renter who often initiates buyout discussions. She also sees the increase in owner move-in evictions as a symptom of the housing crunch.
“Housing is so hard to find for everybody,” New said. “If you have family member moving back, you are more likely to claim one of the units because it’s the only thing you can find. ... Even people who own property can’t find a place to live.”
Supervisor Scott Wiener said the idea that the buyout legislation may be promoting more evictions is not surprising. He initially supported the law.
“As I dug deeper, I became concerned that the legislation would not help tenants and instead would simply lead to an increase in evictions, with tenants losing their housing anyway, having an eviction on their record, and receiving less compensation,” he said.
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