San Francisco will have to find another way to slow the rapid rise in tenant evictions after a federal judge rejected an ordinance passed in June.

U.S. District Judge Charles Breyer ruled (pdf) that the law, which substantially increased the amount of relocation money a landlord would probably have to pay during an Ellis Act eviction, violated the Fifth Amendment of the Constitution. The 1986 state Ellis Act lets landlords evict tenants and sell the apartments as tenant-in-common units, on their way to becoming condos, occupy them or use them for some other non-rental purpose.

Earlier this year, the city augmented its 2005 ordinance that required landlords leaving the rental market to pay evicted tenants $4,500, adjusted for inflation. The judge said that was fair compensation to cover the expense of moving.

But he didn’t like the new ordinance, which required landlords to pay tenants the difference between their current rent and comparable accommodations elsewhere in the city over a two-year period of time. For instance, if the difference between their old and new rent is $1,000 a month, the landlord would have to pay them $24,000 to leave.

In San Francisco’s overheated housing market, that $24,000 figure is likely to be on the light side. The San Francisco Chronicle said it would be “more than $100,000 in most cases.”  

Judge Breyer acknowledged “the severity of the housing crisis” but said the law would prevent some landlords from changing the use of their property, which he deemed a “per se taking” by the government of private property without just compensation. He said landlords were being made “to pay for a broad public problem not of their making.”

The judge also didn’t like that there was no means test for tenants, meaning wealthy tenants might cash in, too. And there was no guarantee that the money would be spent on housing, much less housing in San Francisco. The new law, he said, is not about relocation assistance.

The city argued that the new law was simply rent control by another name, and rent control is not considered a taking under any law. Breyer found that argument “bizarre.” He called the ordinance unprecedented and said “that trail has not been blazed before for good reason.”

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. State lawmakers took a stab at stabilizing the city’s rental market but Senate Bill 1439, which would have limited evictions by forcing new property owners to wait five years before invoking the Ellis Act, died about the time San Francisco passed its ordinance.

–Ken Broder

To Learn More:

SF’s New Law Requiring Landlords to Pay for Evictions Struck Down (by Bob Egelko, San Francisco Chronicle)

Big Win for San Francisco Landlords (by Maria Dinzeo, Courthouse News Service)

S.F. Tenants Won’t Get Protection from Ellis Act Evictions This Year (by Ken Broder, AllGov California)

Daniel Levin et al v. City and County of San Francisco (U.S. District Court for the Northern District of California) (pdf)