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August 15 2014

Permanent Landlords?

Rachel DiCarlo Currie

There’s an important property-rights battle raging in San Francisco, though chances are you haven’t heard anything about it.

The city’s “Tenant Relocation Assistance Payment” ordinance, which took effect June 1, was promoted as a means of helping evicted renters make the transition to new housing. The ordinance says that, if property owners withdraw a housing unit from the rental market -- as they are allowed to do under state law -- they can be forced to pay the evicted tenants “an amount equal to the difference between the unit’s rental rate at the time the landlord files the notice of intent to withdraw rental units with the Board, and the market rental rate for a comparable unit in San Francisco as determined by the Controller’s Office, multiplied to cover a two-year period, and divided equally by the number of tenants in the unit (the ‘Rental Payment Differential’).”

Given (a) the prevalence of rent-controlled properties and (b) the astonishing market value of San Francisco real estate, this formula can leave landlords holding a massive bill. Just ask Daniel and Maria Levin, husband-and-wife small-business owners who live in the upper unit of a house on San Francisco’s famous Lombard Street. The Levins own the entire building, but they had been renting out the lower unit. As the Pacific Legal Foundation (PLF) explains:

“The tenant was in the lower unit when [the Levins] bought the place, and they told the tenant at the time that their plan was to occupy the entire house. They would like to have family and friends stay with them, but have no room. So, in 2013, they went through the legal process to withdraw their unit (before the new ordinance was passed) -- and now the city has slammed them with the new payment requirement that retroactively makes it prohibitively expensive to take their unit off the rental market.”

How expensive, you ask? Under the new ordinance, the Levins would have to pay their tenant $117,000. In a statement issued last month via PLF -- which is representing the Levins (and other plaintiffs) as they challenge the ordinance in federal court -- Daniel Levin summed up their dilemma:

“We simply can’t afford to pay more than $100,000 as the price of occupying the lower unit of our own house. We own a small business and have worked seven days a week for the last 20 years, and are finally at a point when we are hoping to have some time and peace for ourselves. But we can’t see ourselves scuttling our retirement plans by having to pay over $100,000 to occupy our own property.”


Here’s how PLF attorney J. David Breemer framed the debate:

“The city is essentially forcing people to become permanent landlords, by making it wildly expensive to withdraw a unit from the rental market and take possession of their own property. This has nothing to do with ‘relocation assistance,’ because the money that people like the Levins are required to pay to their tenants doesn’t have to be used for relocation. It can be used for anything. In short, this law amounts to out-and-out confiscation.”

Definitely a story worth following.

 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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