Court of Appeal Upholds San Francisco’s Expanded Ellis Relocation Benefits

by Casey Mills on February 22, 2006

The State Court of Appeals ruled unanimously yesterday that San Francisco can require landlords to pay Ellis relocation benefits to all tenants, not just those with low incomes. The battle over such benefits began when a group of landlords represented by attorney Andrew Zacks hoped to strike down legislation passed last year requiring greater payments to tenants evicted with the Ellis Act. While local Superior Court Judge James Warren granted Zack’s plea the first go-around, yesterday the Court of Appeals reversed Warren’s ruling and upheld the law. San Francisco tenants can now celebrate a substantial increase in the amount of money they will receive should they be forced out of their homes under the Ellis Act.

The ruling in yesterday’s case, Pieri v. CCSF, represents a landmark victory for tenants. A 1986 Court of Appeal ruling limited cities requiring landlords to provide Ellis Act victims with relocation benefits to only being able to require that low-income tenants be compensated. Assemblymember Mark Leno’s historic AB 1217 legislation in 2003 – known for exempting SRO’s from the Ellis Act – reinstated the original broad intent of the relocation benefits. Now, the Court of Appeals has affirmed the intent of Leno’s legislation.

Yesterday’s litigation has its roots in February of 2005, when a wave of Ellis Act evictions swept across North Beach. Supervisor Aaron Peskin sought to increase the relocation benefits tenants affected by this trend received. At the time, landlords had to provide $4,500 to every low-income household forced out of their homes, and an additional $3,000 to every senior or disabled tenant.

The “Peskin amendments” changed this requirement, forcing landlords to pay $4,500 to every tenant in a household affected by an Ellis eviction regardless of income, with a maximum payment of $13,500 per unit. The amendments did not alter the $3,000 paid to each senior and disabled tenant.

Soon after, Zacks sued the city over the legislation, claiming that state law regarding the Ellis Act prohibited such an increase. Zacks also claimed that the additional payments would create a significant enough financial burden to prohibit landlords from doing what the Ellis Act was designed to allow them to do – convert their units to condos and sell them so they could get out of the rental business.

In a surprising ruling, Warren upheld Zacks’ claims. Warren particularly agreed with the claim that the high cost of the payments would severely harm landlords. This ruling came despite the maximum payment a landlord would have to make being $13,500, while most units in San Francisco sell for more than $500,000 after being converted to condos.

The city filed an appeal to the ruling, which the State Court of Appeals reversed yesterday.

“This is an important case for tenants facing Ellis Act eviction,” said Tenderloin Housing Clinic attorney Dean Preston. “A single $4500 payment for a family to relocate in San Francisco is grossly inadequate. The legislation sponsored by Supervisor Peskin recognized this reality, and provided a much-needed increase in the payments. When you think about it, it’s really outrageous that real estate speculators who stand to make hundreds of thousands, if not millions, off these evictions would send their hired guns into court to attack this increase in the relocation payments.”

The Court of Appeals ruling was unpublished, but the City Attorney’s office is expected to request publication so that tenants throughout California can also benefit.

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