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Court sides with landlords on eviction payouts

Tuesday, April 26, 2005

City ordinance ruled illegal in blow to tenants
By J.K. Dineen

In a legal victory for landlords, a Superior Court judge has tossed out a new city law requiring property owners to pay $4,500 in "relocation benefits" to tenants evicted under the state Ellis Act.

The ordinance, which the Board of Supervisors passed in January, increased the amount a landlord must pay evictees from $4,500 per unit to $4,500 per tenant, with a cap of $13,500 for a single unit. Senior or disabled tenants also receive an additional $3,000.

But Judge James Warren ruled Monday that the ordinance violated the spirit of the Ellis Act, a state law allowing property owners to evict tenants in rent-controlled buildings as long as the building is not rented out afterward for five years.

Warren agreed with the petitioners, two landlords and the lobbying group Small Property Owners of San Francisco, that the city ordinance "offends the core purpose of the Ellis Act." He said the increased benefits could prove "financially burdensome" to landlords and "prevent all but the wealthiest landlords from going out of business."

"This is exactly what the Ellis Act was designed to prevent," Warren wrote in the decision.

San Francisco Tenants Union organizer Ted Gullicksen said he was disappointed with the decision. He called the relocation benefits ordinance "pennies compared to the huge profit speculators are making via conversion."

"No one even dreamt that this legislation would lesson the number of Ellis Act evictions, even by one eviction," said Gullicksen. "It was mitigation and homeless prevention, that is what it really was."

Small Property Owners of San Francisco attorney James Kraus said the decision was just. He said the $13,500 ceiling was arbitrary and nothing would have prevented the Board of Supervisors from raising the "relocation benefits to $50,000 or $190,000."

"The Ellis Act was not intended to be a means by which San Francisco could transfer money from owners to tenants for no reason other than to create a windfall," he said.

While small-property advocates paint the Ellis Act as means to get out of the heavily regulated rental business, tenants groups argue that speculators use the law as a tool to clean out buildings before selling them off as tenancies-in-common. A total of 1029 units in 177 buildings were cleared out using the Ellis Act in fiscal year 2003-04, a 49 percent increase over the previous year, according to the Rent Board.

A spokesman for City Attorney Dennis Herrera said no decision had been made on whether to appeal.

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