State legislation to slow the pace of evictions that have swept through San Francisco amid skyrocketing rents and property values died this week when its sponsor conceded to landlords and the Chamber of Commerce and pulled the bill.

Senate Bill 1439 would have limited evictions by forcing new property owners to wait five years before invoking the 1986 Ellis Act, which lets landlords evict tenants and sell the apartments as tenant-in-common units, on their way to becoming condos.

The Ellis Act helps free up a highly-competitive real estate market at the expense of those who can’t compete. San Francisco is currently undergoing convulsions as the tech boom feeds massive amounts of money into the city. Competition for a coveted residence in town has fueled a rapid escalation in Ellis Act evictions.

Ellis Act evictions in the city nearly doubled in the past year, from 116 to 216, according to the San Francisco City and County Residential Rent Stabilization and Arbitration Board. They account for about 11% of all evictions. Ellis evictions last year nearly doubled over the year before that.

Opponents of the legislation said it would effectively prevent property owners, many of them mom-and-pop landlords, from getting out of the rental business and realizing a return on their investment. However, a study (pdf) by Tenants Together found that speculators, not those long-term landlords, were a major force behind Ellis Act evictions.

Sixty percent of Ellis evictions in 2013 were by landlords who had held their property for less than one year and 79% were by owners who had made their purchase within the last five years. Cumulative data gathered from 2009-13 was similar.

A review of all Ellis Act evictions since 1997 revealed that 30% of Ellised units were by owners who had Ellised at least one other property. In other words, they were speculators. Tenants Together calls them “serial evictors.”

“Some speculators have entered, exited, re-entered, and re-exited the rental business, evicting tenants from multiple buildings. These speculators clearly have no plan to exit the rental business but are simply using the Ellis Act to convert the buildings to other uses and then acquire new rental properties for the same purpose.”    

While free-marketeers would readily defend that behavior, it is not the image generally cultivated by defenders of the Act who prefer to weigh the unfortunate loss of rentals in an already-tight rental market against the right of long-term owners to exit it gracefully.

The Ellis Act was passed by the state Legislature in response to a California Supreme Court ruling a few years before that upheld Santa Monica’s right to closely control its rental market. The ordinance mirrored others in the state that were passed to stabilize rental markets after inflation in the 1970s devastated lower-income renters. The Ellis Act undid all that.

Senator Mark Leno (D-San Francisco) withdrew SB 1439, which passed the state Senate last month, after it fell one vote shy in the Assembly Housing and Community Development Committee. That meant the bill would have to clear two committees in a week and win approval from the Assembly, a long shot at best.

His legislation met the same fate as another effort to rein in Ellis Act evictions by another San Francisco Democrat, Assemblyman Tom Ammiano. His bill, which never got a floor vote in either chamber, would have given local governments the authority to declare a moratorium on Ellis Act evictions if the housing supply reached designated low levels.

–Ken Broder

To Learn More:          

Sen. Mark Leno Abandons Bill to Curb Ellis Act Evictions (by Melody Gutierrez, San Francisco Chronicle)

Leno Drops Bill to Block Condo Conversions in San Francisco (by Dan Walters, Sacramento Bee)

Leno Declines to Seek Reconsideration of Ellis Act Reform Bill (by Kate Conger, The San Francisco Examiner)

As Ellis Act Reform Bill Faced Death, Where Was Ron Conway? (by Joe Fitzgerald Rodriguez, San Francisco Bay Guardian)

The Speculator Loophole: Ellis Act Evictions in San Francisco (Tenants Together & The Anti-Eviction Mapping Project) (pdf)

Evictions Soar as State’s Ellis Act Empowers San Francisco Gentrification (by Ken Broder, AllGov California)