BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 464|
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THIRD READING
Bill No: SB 464
Author: Kuehl (D), et al
Amended: 5/31/07
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-2, 3/27/07
AYES: Corbett, Kuehl, Steinberg
NOES: Harman, Ackerman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Rental property: public entity restrictions:
Ellis Act
SOURCE : Western Center on Law and Poverty
California Alliance for Retired Americans
DIGEST : This bill limits the ability of a rental
property owner to exercise its Ellis Act rights (allowing a
property owner to get out of the rental business and in the
process evict all tenants from the rental property,
notwithstanding any local rent control laws) to cases where
the owner has owned the property for at least three years
and who acquired ownership of the property on or after
March 27, 2007. This bill extends from 120 days to one
year the time period given to a tenant to vacate a rental
property being "Ellised" (i.e., taken out of the rental
business) when the property owner's date of withdrawal from
the rental market has already been extended to one year by
reason of a qualified elderly or disabled tenant exercising
CONTINUED
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his/her right to the extended date of withdrawal.
Senate Floor Amendments of 5/31/07 reduce the proposed
holding period from five years to three years, and add
co-authors.
ANALYSIS : Existing law generally prohibits public
entities from adopting any statute, ordinance, or
regulation, or taking any administrative action, to compel
the owner of residential real property to offer or to
continue to offer residential property for rent or lease.
[Section 7060, et. seq. of the Government Code, enacted by
SB 505 (Ellis), Chapter 1509, Statutes of 1985].
This bill applies those preemption provisions only to
owners of residential real property who have owned the
property for at least three years, thereby allowing local
controls on rental property owned less than five years and
who acquired ownership of the property on or after March
27, 2007 .
Existing law provides that a public entity with rent
control laws may require the owner to notify the entity of
an intent to withdraw residential property from rent or
lease, and may establish the date on which the property is
withdrawn from rent or lease at 120 days from the delivery
of that notice to the public entity. However, if a tenant
or lessee is at least 62 years of age or is disabled, and
has lived in the rental property for at least one year
prior to the delivery date of the "notice of intent to
withdraw" (hereinafter "intent notice"), existing law
extends the date of withdrawal and the tenancy of that
qualified tenant to one year (instead of 120 days) after
the delivery date of the intent notice. Existing law
specifies that this extended date of withdrawal occurs only
if the qualified tenant or lessee gives written notice of
the extension right to the owner within 60 days of the
owner's delivery of the intent notice to the public entity.
This bill provides that a public entity with a rent control
system may require the withdrawal date for all tenancies on
the rental property to be one year from the delivery date
of the intent notice when a qualified elderly or disabled
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tenant or lessee has given the requisite 60-day notice to
the owner to extend the tenancy and the withdrawal date to
one year. This bill requires an owner in these
circumstances to notify all tenants of the extended date of
withdrawal.
Background
The Ellis Act was adopted in 1985 by SB 505 (Ellis),
Chapter 1509, Statutes of 1985, following the California
Supreme Court's decision in Nash v. City of Santa Monica
(1984) 37 Cal. 3d 97, which upheld the power of a city, in
the context of a land use ordinance, to require a
residential property owner to obtain a removal permit under
specified criteria before the owner could demolish the
rental property and remove it from the rental marketplace.
SB 505 (Ellis) preempted the ability of local governments
to adopt any local ordinance that prohibited rental
property owners from removing a rental property from the
marketplace, and specified certain procedures should a
property owner decide to exercise its "Ellis" rights.
According to the bill's sponsor, Western Center on Law and
Poverty, the exercise of the "Ellis" rights by an
increasing number of real property speculators has produced
a ruinous impact on affordable rental housing in Los
Angeles and other jurisdictions. This bill is intended to
reduce its deleterious effects on tenants and the
significant loss of affordable housing stock in Los Angeles
and other cities by modifying the "Ellis" right of rental
property owners to those owners who have owned the property
for at least five years.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/31/07)
Western Center on Law and Poverty (co-source)
California Alliance for Retired Americans (co-source)
Affordable Housing Advocates of Santa Cruz County
Affordable Housing Clearinghouse
AIDS Legal Referral Panel
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Arc of San Francisco, The
Asian Law Caucus
Beyond Shelter
Cabrillo Economic Development Corporation
California ACORN
California Alliance for Retired Americans
California Affordable Housing Law Project
California Church Impact
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation
Chicano Consortium
Coalition for Economic Survival
Coalition on Homelessness - San Francisco
Corporation for Supportive Housing
Community Interface Services
Community Tenants Association of San Francisco's Chinatown
DCM Properties, Inc.
East Bay Asian Local Development Corp.
East Bay Community Law Center
Equality California
Fair Housing Council of Orange County
Fair Housing Foundation - Long Beach
Fair Housing of Marin
Friends Committee on Legislation
Gray Panthers
Gubb & Barshay LLP
Housing Leadership Council of San Mateo County
Housing Rights Center
Housing Rights Committee of San Francisco
Independent Living Center of Southern California
JERICHO
Just Cause Oakland
Law Offices of James Coy Driscoll
Life Steps Foundation, Inc
Los Angeles Center for Law and Justice
Los Angeles Community Action Network
Loaves & Fishes, Sacramento
National Center for Lesbian Rights
Older Women's League of California
Orange County Community Housing Corporation
ONE Company
Public Counsel
Religious Witness with Homeless People
Rural Communities Housing Development Corp.
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Sacramento Self-Help Housing
San Francisco Council of Community Housing Organizations
San Francisco Tenants Union
Senior Action Housing Committee
Senior Action Network
Sentinel Fair Housing
Shelter Partnership, Inc.
Skid Row Housing Trust
Society of St. Vincent de Paul, Council of Los Angeles
South of Market Project Area Committee
Southern California Association of Non-Profit Housing
Southern California Indian Center
Strategic Actions for a Just Economy
Tenderloin Housing Clinic
Venice Community Housing Corporation
OPPOSITION : (Verified 5/31/07)
Apartment Association of California Southern Cities
Apartment Association of Greater Los Angeles
Apartment Association of Orange County
California Apartment Association
California Association of Realtors
ARGUMENTS IN SUPPORT : According to the Western Center on
Law and Poverty:
"In Los Angeles, more than 12,000 rental units have been
'Ellised' in the last 5 years. The loss of this vast
number of units, almost all of which were under the
city's rent stabilization ordinance, has been devastating
to the tenants evicted and to the city's
rapidly-declining affordable housing stock. Ellis
activity has also been increasing in other cities such as
San Francisco, Santa Monica, and San Diego, where
approximately 4,000 additional units have been lost.
"The problem is not long-term landlords, but new buyers
of older (and therefore less expensive) buildings, who
have no intention of continuing to rent the units. These
buyers instead typically 'Ellis' the building and evict
all the tenants, demolish the building, and then
construct expensive condominiums. In the last 2 years,
fully 46% of the 'Ellised' buildings in Los Angeles were
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'Ellised' less than a year after purchase. Another 19%
were 'Ellised' 1 to 2 years after purchase. In contrast,
only 21% of the 'Ellised' buildings had been held for
more than 5 years."
Proponents also contend that elderly and disabled tenants
have been particularly victimized, asserting that over 60
percent of the buildings Ellised in San Francisco, since
2000, have had a senior or disabled tenant evicted.
Proponents assert that this bill is critically necessary to
reduce the destructive effects on tenants and the
affordable housing stock in those cities that choose to
enact rent control protections. Combined, more than 16,000
affordable housing units have been lost statewide in the
last five years, and more than 9,000 units alone in the
last two years. While the proposed five-year holding
period would not solve the entire problem, proponents
believe that it would at least discourage speculators from
buying the property and instantly evicting tenants.
Proponents state that a three-year holding requirement
would have prevented almost 79 percent of the buyers who
opted to evict their tenants and Ellis their properties in
Los Angeles since January 2005.
ARGUMENTS IN OPPOSITION : Opponents, generally
categorized as the landlords' lobby, raise several
arguments against this bill.
The Apartment Association of Orange County (AAOC) asserts
that this bill invites new governmental intrusion and
effectively emasculates any protection afforded to owners
who may have owned their properties for less than five
years. AAOC further asserts that every change of property
ownership (e.g., change in marital status, inheritance)
starts the clock running again, and that this bill is a
huge restraint on alienation of property.
AAOC also argues that it is unreasonable to extend the
longer one-year notice periods to all tenants simply
because one of the residents is a qualified elderly or
disabled tenant. Opponents assert that this provision
would further penalize a property owner who is already
subsidizing that and all other tenants through the
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operation of the local rent control ordinance.
The California Association of Realtors (CAR) contends that
this bill will discourage investment in rental housing and
significantly depress sales prices. CAR also contends that
substantially limiting a property owner's right to go out
of business will decrease maintenance and appearance,
property values, selling prices, and the ability to obtain
a loan.
CAR further states that this bill will force long-time
owners to proactively evict tenants prior to putting their
property on the market in order to gain the best market
price, and cause single family home owners to think twice
in deciding to offer their property for rent.
The Apartment Association of Greater Los Angeles (AAGLA)
and the Apartment Association of California Southern Cities
add:
"The Ellis Act has been an important and helpful tool to
clean up and add housing units to blighted downtown areas
in Los Angeles and Santa Monica and create home ownership
opportunities in San Francisco.
"SB 464 would severely punish many of the same age group
[the elderly] the bill is purportedly designed to help by
artificially reducing the value of their property by
limiting options of purchasers of the property. It would
also create significant uncertainty for owners and their
tenants as many owners would, naturally, consider keeping
units vacant, until the five-year period expires,
potentially exacerbating blight.
"Proponents have produced no data to show that seniors
and disabled persons are somehow disproportionately
affected by the operation of the Ellis Act. They already
get a one-year notice, often locally ordered relocation
fees and a right of first refusal. This measure would
extend that one-year period to all tenants in the
building if only one senior resides there."
RJG:mw 6/1/07 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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