SAN FRANCISCO -- State Sen. Mark Leno announced legislation Monday that would modify state law in order to dissuade real estate speculators in San Francisco from displacing long-term tenants from rent-controlled units.
The proposed changes to the Ellis Act, enacted in 1985 to allow owners a path out of the rental business, come during a housing boom in San Francisco that has led to high-profile displacements of seniors, disabled people and low-income families.
The bill proposed by Leno (D-San Francisco), would close a loophole in the Ellis Act that has allowed speculators to buy rent-controlled buildings and immediately move to displace tenants. The buildings are generally then sold as tenancies-in-common to buyers and are permanently removed from the city's dwindling rental housing stock.
The bill would authorize San Francisco to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property, ensure that landlords can only activate their Ellis Act rights once, and create penalties for violations of these new provisions.
Leno held a morning news conference with San Francisco Mayor Ed Lee, tenant advocates, and labor and business leaders. In a statement, he said speculators have used the law to evict vulnerable renters with "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," he said of Senate Bill 1439.
Ellis Act evictions in San Francisco have tripled in the last year as more than 300 properties were taken off the rental market. Many more properties were vacated by tenants who were offered buyouts and told that if they refused they would face formal Ellis Act eviction proceedings.
The trend has accelerated as San Francisco's housing prices have risen to top the nation.
According to officials, about 50% 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.
"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, who has paved the way for the recent technology boom with generous tax policies, but recently pledged to ensure that housing remains affordable for all -- or at least becomes less prohibitive.
"These speculators are turning a quick profit at the expense of long-time tenants and do nothing to add needed housing in our city," Lee added. "These are not the landlords the Ellis Act was designed to help."
Janan New, executive director of the San Francisco Apartment Assn., called the efforts misplaced, saying overly burdensome rent control legislation dating back to the early 1990s that caps annual increases at a little over 1% has made the landlord business untenable for many.
"We believe that the true story of all of this is an over-regulated rental market in San Francisco," she said, noting that allowable increases do not keep up with inflation. "Owners choose to get out of the rental market business because they can no longer afford to subsidize their tenants," she said.
For many small owners, she said in an interview, the Ellis Act "is the only way that they can reclaim their property."