New California Legislative Efforts to Mitigate Ellis Act Evictions

By Melanie Nathan, February 24, 2015.

Senator Mark Leno
Senator Mark Leno

SACRAMENTO – Senator Mark Leno has introduced new legislation that would help mitigate the negative impacts of Ellis Act evictions in San Francisco. Senate Bill 364 closes a loophole in the Ellis Act that allows speculators to buy rent-controlled buildings in San Francisco and immediately begin the process of evicting long-term renters. The new bill mirrors SB 1439, which was approved by the Senate last year but fell one vote short in the Assembly Housing Committee. SB 364 is sponsored by San Francisco Mayor Ed Lee.

“Today we continue our fight to help alleviate San Francisco’s affordable housing crisis,” said Senator Leno, D-San Francisco. “The Ellis Act is being abused by speculators who are buying up properties, evicting long-term tenants and reselling their buildings for a profit. Left behind are the shattered lives of residents who have deep roots in our communities. This was never how the Ellis Act was intended to be used, and we must act now to protect our unique city from further devastation.”

SB 364 authorizes San Francisco to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property. It also ensures that landlords can only activate their Ellis Act rights once and creates penalties for violations of these new provisions.

“We may be making progress in new housing construction in San Francisco, but we must still work to stabilize people in their own homes, in their own neighborhoods, and prevent displacement because of speculative evictions,” said San Francisco Mayor Ed Lee. “My top state legislative priority once again is to partner with Senator Leno to reform the Ellis Act in Sacramento and end speculator evictions in our City. This legislation is good policy, and we are ready to fight this battle with our coalition of tenants, labor and business leaders to support middle income and working families in San Francisco.”

Enacted as state law in 1985, the Ellis Act allows landlords who want to get out of the business 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 rent controlled and home to elderly, disabled and working class Californians. When these affordable rental units are removed from the market, they never return.

A 2014 report from Tenants Together, California’s statewide organization for renters’ rights, revealed that most Ellis Act evictions in San Francisco have been initiated by investors, not landlords. More than 50 percent of the city’s evictions begin within the first year of a property’s ownership, and nearly 80 percent start within the first five years. In addition, a third of all Ellis Act evictions come from investors who have entered and exited the rental business more than once, evicting residents from multiple buildings.

“Ellis Act evictions are devastating to tenants and communities,” said Dean Preston, Executive Director of Tenants Together. “Tenants Together supports this legislative reform to stop unfair evictions by real estate speculators.”

Thousands of units have been taken off the rental market in San Francisco due to Ellis Act evictions, which have occurred simultaneously with huge increases in property values and housing prices.

SB 364 will be heard in policy committees in the Senate this spring.

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