San Francisco City Attorney Dennis Herrera said he will appeal a ruling by a federal judge on Tuesday that invalidates a city ordinance requiring landlords to make steeply increased payments to tenants evicted from properties intended to go off the rental market.
U.S. District Judge Charles Breyer said that the financial burden faced by landlords subject to the legislation was not proportionate to the harm they were actually causing tenants.
While Breyer acknowledged the severity of San Francisco’s housing crisis and lauded the intentions of the San Francisco Board of Supervisors in creating the legislation, he said “The Ordinance requires an enormous payout untethered in both nature and amount to the social harm actually caused by the property owner’s action.”
Herrera, however said that due to the city’s housing affordability crisis the “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.”
Herrera said the judge’s ruling may become an obstacle for cities defending development fees and other development approval conditions, because its sets a precedent that the fee has to be tethered to the amount and type of social harm, which can be difficult to measure and define.
He said cities must “now show not only that a property owner’s actions cause social harm, but also that the owner’s actions are the only cause of that harm.”
Herrera argues that if the ruling holds, “the consequences could be dire for many laws that protect land use and our environment.”
The legislation, which will no longer be valid after Friday, was drafted by Supervisor David Campos and took effect in June and required landlords to pay two years worth of the difference between the tenants’ rent-controlled rate and the market rate, determined by a formula developed by the city controller’s office.
The ordinance was intended to mitigate the effects of the state’s Ellis Act, statewide legislation passed in 1985 that allows landlords to evict tenants without cause if they intend to take the unit off the rental market.
The ordinance was put in place after critics accused landlords of abusing the Ellis Act by taking buildings off the market to repurpose them as condominiums or sell them at a large profit. Critics have pointed to an increasing number of Ellis Act evictions that have come about in the city as rents continue to skyrocket.
Breyer said that while landlords should be required to take on some of the direct financial burden from the eviction, such as moving costs, packing costs and paying a new security deposit, he drew the line at requiring them to pay two years’ worth of the differential.
Breyer argued that landlords were not at fault for the difference between rent-controlled and at-market-rate rent that evicted tenants would be facing.
Judge Breyer’s order stops the City from enforcing the ordinance after Friday, but a relocation amount to the tenant, capped at $13,500 per household, remains in effect, according to the city attorney’s office.
Attorney J. David Breemer, who represents the plaintiff, Pacific Legal Foundation, called Breyer’s decision a victory for property owners and property rights.
In a statement issued by Breemer today, he said, “As Judge Breyer recognized, the law is nothing less than an unconstitutional ransom demand on San Francisco’s rental property owners.”
Breemer said that, if necessary, Pacific Legal Foundation will take the case all the way to the U.S. Supreme Court “to put a final tombstone on this oppressive law.”
He said the ruling stands up for property owners’ rights and prevents the government from forcing owners to pay in order to make use of property they already own.
The City Attorney’s Office plans to file an appeal early next week.
Hannah Albarazi and Scott Morris, Bay City News