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 --