BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: SB 1267 Hearing Date: 4/26/2016 ----------------------------------------------------------------- |Author: |Allen | |----------+------------------------------------------------------| |Version: |4/14/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Alison Dinmore | |: | | ----------------------------------------------------------------- SUBJECT: Ellis Act DIGEST: This bill requires a city or county by ordinance, when the city or county requires notice of intent to withdraw accommodations pursuant to the Ellis Act, to give one year's notice to a tenant with a custodial or family relationship with a pupil enrolled in a primary or secondary school who lives in an accommodation before terminating a tenancy. ANALYSIS: Existing law: 1)Prohibits, under the Ellis Act (Act), a public entity, by statute, ordinance, or regulation, from compelling an owner of any residential real property, except for a residential hotel, to continue to offer the rental units for rental housing. The Act maintains the authority for a public entity to regulate the subsequent use of the property and mitigate any adverse impacts on people who are displaced by the withdrawal of a property from the rental market. The Act only applies when an owner seeks to remove all units from rent or lease in a building, or all units on a property with a building containing three or fewer units. 2)Establishes procedures in rent-control jurisdictions that public entities can impose upon owners prior to withdrawing property from the rental market. If a city or county requires the owner to give notice before withdrawing the building from SB 1267 (Allen) Page 2 of ? the market, the owner must provide 120 days' notice - or one year's notice in the case of tenants who are disabled or more than 62 years old - before terminating the tenancy. Owners who seek to re-rent the units within two years after withdrawal are liable to displaced tenants for actual and exemplary damages and required to offer the units to displaced tenants under the prior rent-controlled lease terms. Public entities may also require an owner to offer re-rented units to displaced tenants for up to 10 years. If the owner demolishes the old units and constructs new rental units on the same property within five years of withdrawal, a city or county may subject the new units to its rent-control ordinance. 3)Requires any landlord or party on behalf of the owner entering into a rental agreement to disclose the name, phone number, and address of the person or entity to which rental payments shall be made. If rent payments are to be made personally, the party shall also disclose the usual days and hours that the person will be available to receive payments. In lieu of personal delivery, at the owner's option, the rental agreement or lease shall disclose either: a) the account, name, and address of a financial institution into which rent payments may be made, provided the institution is within five miles of the rental property, or b) the information necessary to establish an electronic funds transfer procedure for paying the rent. 4)Requires any landlord or party on behalf of the owner entering into a rental agreement to disclose in the rental agreement the form or forms in which rental payments are to be made. 5)Provides that if the address provided by the owner does not allow for personal delivery, it shall be conclusively presumed that when the tenant mails the rent to the name and address provided, it shall be deemed receivable by the owner on the date posted, if the tenant can show proof of the mailing. This bill: 1)Provides that if a city or county requires the owner to give notice before withdrawing the building from the market, the owner shall provide one year's notice from the date of delivery of the notice of intent to withdraw in the case of tenants who have a custodial or family relationship with a pupil enrolled in a primary or secondary school who lives in SB 1267 (Allen) Page 3 of ? the accommodations before terminating the tenancy. 2)Provides that if rental payments may be made personally, the rental agreement or lease shall disclose the address for payment, which shall be within five miles of the rental property and shall disclose a name and address to which the rent may be tendered by mail. The rental agreement shall also disclose a name and address to which the rent may be tendered by mail. Additionally, the rental agreement may provide one of the following: a) The account, name, and address of a financial institution into which rent payments may be made, provided the institution is within five miles of the rental property. b) The information necessary to establish an electronic funds transfer procedure for paying the rent. 1)Provides that it shall be conclusively presumed that when the tenant mails the rent to the name and address provided, it shall be deemed receivable by the owner on the date posted, if the tenant can show proof of the mailing. COMMENTS: 1)Purpose. According to the author, California's Ellis Act gives landlords a statutory right to exit the rental housing market, but places conditions and restrictions - including mandatory notice requirements - on a landlord that must be followed when evicting tenants under the law. An "Ellised" tenant who is at least 62 years old or who is living with disabilities must receive at least a year's notice under the act. This bill extends an identical year-long notice to families who have children enrolled in primary or secondary school. It is reasonable, just, and humane to provide families with children enough time to finish out the school year, find a new place to live, and potentially find a new school where parents can enroll their children. As has been thoroughly documented in the media, Ellis Act evictions are on the rise across the state. According to a recent Los Angeles Times analysis, more than a thousand affordable, rent-controlled apartments were taken off the market within the City of Los Angeles in 2015, almost three times the amount removed in 2013. According to the Los Angeles SB 1267 (Allen) Page 4 of ? Daily News, 2,287 units were Ellised in L.A. over the past two years, a six-fold increase in the number that were Ellised from 2010 through 2011. Data show Ellis Act evictions in Santa Monica are also on a precipitous upswing. This bill gives families with children more time to prepare in the unfortunate event that they are evicted under the Ellis Act and provides reasonable protections that make it easier for a tenant to pay his or her rent. 2)Effects of the bill. The Ellis Act presently permits a city or county, by ordinance or regulation, to provide notice of the date in which accommodations are to be withdrawn from rent or lease. If a city or county requires the owner to give notice before withdrawing the building from the market, the owner must provide one year's notice in the case of tenants who are disabled or more than 62 years before terminating the tenancy. This bill would also provide one year's notice to tenants who have a custodial or family relationship with a pupil enrolled in primary or secondary school who lives in the accommodation. The author points to examples in his district in which buildings with school-aged children have been Ellised. The additional time proposed in this bill would permit these children to complete the school year at one school instead of relocating to a new school. 3)Opposition. According to a coalition of apartment associations, there is only one way for property owners of rent controlled buildings to exit the business: the Ellis Act. The elderly and disabled must be provided one year's notice because their rental housing options are far more limited than other tenants'. The provision expanding the one-year notice to people living with children is vague and unreasonable. Additionally, the California Association of Realtors notes that these kinds of limitations discourage investment in rental housing, negatively impact property values, and cause substantial financial losses to rental property owners. 4)Double-referral. This bill has been double-referred to this committee and the Senate Rules Committee. This committee has jurisdiction over the Ellis Act and shall limit its review only to those provisions in the bill. SB 1267 (Allen) Page 5 of ? Related Legislation: SB 364 (Leno, 2015) - would have allowed the city and county of San Francisco to prohibit, by ordinance or ballot measure, a rental housing owner from removing a building from the market pursuant to the Ellis Act unless all owners in the property have held their ownership interest for at least five years. This bill failed in the Senate Transportation and Housing Committee. SB 1439 (Leno, 2014) - would have allowed the city and county of San Francisco to prohibit, by ordinance or ballot measure, a rental housing owner from removing a building from the market pursuant to the Act unless all owners in the property have held their ownership interest for at least five years. This bill failed passage in the Assembly Housing and Community Development Committee. SB 464 (Kuehl, 2007) - would have limited the ability of a rental property owner to exercise their Ellis Act rights to cases where the owner has owned the property for at least three years and acquired ownership of the property on or after March 27, 2007. This bill died on the Senate Floor. FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No POSITIONS: (Communicated to the committee before noon on Wednesday, April 20, 2016.) SUPPORT: California Rural Legal Assistance Foundation City of Santa Monica Eric Garcetti, Mayor, City of Los Angeles Western Center on Law and Poverty OPPOSITION: Apartment Association, California Southern Cities Apartment Association of Orange County Apartment Association of Greater Los Angeles California Apartment Association California Association of Realtors SB 1267 (Allen) Page 6 of ? East Bay Rental Housing Association North Valley Property Owners Association San Diego County Apartment Association Santa Barbara Rental Property Association -- END --