SAN FRANCISCO (CN) - Property owners have sued San Francisco, fighting an ordinance that retroactively requires them to pay massive amounts to evict tenants under California's Ellis Act.
Lead plaintiff Daniel Levin calls the ordinance "a blatant transfer of wealth from some private citizens to others," in violation of the Fourth Amendment, due process and takings clause of the Constitution.
Levin and his wife bought a two-unit building on Lombard Street in 2008. The ground floor unit was occupied by a woman who had lived there since 1988.
The Levins say they never wanted to be landlords and immediately informed the woman that they planned to remodel the building and use both units themselves. They moved into the one-bedroom top floor unit, and after the tenant protested their attempts to remodel, the Levins decided to take the ground floor apartment off the rental market, through the 1985 Ellis Act, which allows landlords to evict tenants if the landlord wants to get out of the rental business.
The Levins claim they shelled out more than $8,000 under old tenant payment laws. But under a San Francisco ordinance that took effect in June, they are now required to pay her the difference between her old rent of $2,479 a month and the price of comparable housing in the city for two years. This brings the total to $117,958.
The Levins say the city is punishing property owners with outrageous fees.
A second lawsuit, filed the same day, makes similar allegations.
In an interview with Courthouse News, attorney J. David Breemer, with the Pacific legal Foundation said: "What the real purpose is here, and the city supervisors who passed this were candid, was the real problem is there are rental units going off the market and they don't like that. What it does is pretty straightforwardly preclude and make it difficult, if not impossible, for people to stop being landlords."
Co-plaintiffs in Levin's case include Park Lane Associates, which owns a 33-unit building, the San Francisco Apartment Association, and the Coalition for Better Housing.
Park Lane claims it will have to pay the tenants of 15 of its units more than $1.4 million.
The plaintiffs challenge the retroactive aspect of the ordinance, and that it does not require tenants to use the payments for relocation expenses.
"We don't contest that government entities can legislate some property uses. Some restrictions are reasonable, but this crosses a line," Pacific Legal Foundation attorney Jennifer Thompson said in an interview. "There's no hardship requirement, so the tenant could be a millionaire. So this can't be said to be helping impoverished tenants find new housing."
She added: "You're entitled to rely on the law as it is when you purchase something. In our country, we disfavor retroactive laws because the consensus is it's unfair. Even people who started the process of taking the property off the market are subject to these fines."
Thompson said the Constitution prohibits the government from transferring private property to another private party. "A problem with this ordinance and why we think it violates the Constitution is that it requires the massive direct payment of money from one private party to another."
Breemer added: "We need to take a step back and remember this is not the tenant's property. They have a lease. The landlord cannot break the lease. They have to give proper notice, just like anyone else. At least our guys, the Levins, are not doing anything nefarious."