Closing Loophole in State Law to Prohibit Real Estate Speculators From Using the Ellis Act to Displace Tenants in San Francisco
Today Mayor Edwin M. Lee and State Senator Mark Leno joined State and local leaders, including Assemblymember Phil Ting and Supervisors David Chiu and David Campos along with tenant advocates, labor groups and business leaders to announce legislation closing a loophole in the Ellis Act that allows speculators to buy rent-controlled buildings in San Francisco and immediately evicting long-term tenants. To counter a recent surge in Ellis Act evictions in San Francisco, Senate Bill 1439 authorizes the City to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property, ensures that landlords can only activate their Ellis Act rights once, and creates penalties for those who violate the law.
“We have some of the best tenant protections in the country, but unchecked real estate speculation threatens too many of our residents,” said Mayor Lee. “These speculators are turning a quick profit at the expense of long time tenants and do nothing to add needed housing in our City. These are not the landlords the Ellis Act was designed to help, and this legislation gives San Francisco additional tools to protect valuable housing and prevent Ellis Act speculator evictions, which already displace working families and longtime San Franciscans. This carve out is a good policy for San Francisco, and I thank Senator Leno for being a champion on this issue. Together we have built a large coalition of renters, labor and business leaders to fight this battle in Sacramento to support middle income and working families here in our City.”
“The original spirit of California’s Ellis Act was to allow legitimate landlords a way out of the rental business, but in recent years, speculators have been buying up properties in San Francisco with no intention to become landlords but to instead use a loophole in the Ellis Act to evict long-time residents just to turn a profit,” said Senator Leno. “Many of these renters are seniors, disabled people and low-income families with deep roots in their communities and no other local affordable housing options available to them. Our bill gives San Francisco an opportunity to stop the bleeding and save the unique fabric of our city.
Ellis Act evictions in San Francisco have tripled in the last year as more than 300 properties were taken off the rental market. This spike in evictions has occurred simultaneously with huge increases in San Francisco property values and housing prices. About 50 percent of the City’s 2013 evictions were initiated by owners who had held a property for less than one year, and the majority of those happened during the first six months of ownership.
In light of the growing problem of speculative Ellis Act evictions, Mayor Lee joined Senator Leno, Assemblyman Ting, Supervisors Chiu and Campos and a diverse coalition of supporters, including business leaders, property owners and developers, to reform the Ellis Act in Sacramento. Senate Bill 1439 was the result of this effort.
“Rents in San Francisco are at an all-time high. My former neighbors and I, working families and seniors, were displaced from the place we called home for several decades,” said evicted senior Gum Gee Lee. “Those that have yet to receive an Ellis Act notice continue to live in fear, fear that they too will be evicted from their homes. For seniors such as myself who rely on public transportation and access to social and health services within our community, Ellis evictions cut our lifeline, our independence to thrive. For working class families such as my former neighbors from Jackson Street, they continue to struggle to survive in San Francisco. San Francisco is our home.”
Enacted as State law in 1985, the Ellis Act allows owners to evict tenants and quickly turn buildings into Tenancy In Common (TIC) units for resale on the market. In San Francisco, the units that are being cleared are often rent controlled and home to seniors, disabled Californians and working class families. When these affordable rental units are removed from the market, they never return.
SB 1439 will be heard in the State Senate Policy Committees this Spring.