State Supreme Court agrees that SF ordinance restricting landlords went too far

The state Supreme Court refused Wednesday to reinstate a San Francisco ordinance requiring landlords who evict their tenants to go out of the rental business to wait 10 years before rebuilding or renovating any of the formerly rented units.

A state appeals court had ruled in March that the ordinance, enacted in December 2013, penalized property owners for exercising their rights under the state’s Ellis Act. That 1986 law, backed by real estate interests, allows owners to evict renters without any of the reasons usually required for evictions — like nonpayment of rent, or property damage — if the owner is taking the property off the rental market.

On Wednesday, the state’s high court denied review of the city’s appeal by a 5-1 vote, making the appellate ruling final. Only Justice Mariano-Florentino Cuéllar voted to take up the case.

The 2013 ordinance, sponsored by then-Supervisor John Avalos, was challenged by a group called the Small Property Owners of San Francisco Institute. An initial ruling by Superior Court Judge Teri Jackson upheld the measure.

But the First District Court of Appeal said in March that the ordinance “penalizes property owners who leave the rental market,” as they have a right to do under state law.

The 3-0 ruling by Justice Marla Miller cited a 2016 decision by another panel of the same court that overturned a San Francisco ordinance requiring landlords to wait 10 years after an Ellis Act eviction before merging the former rental unit with other units on the property.

City officials said they chose the 10-year waiting period because the Ellis Act itself allows property owners to resume rentals after 10 years if they offer the evicted tenants a chance to return to their former unit. If the owner returns the unit to the rental market within five years, the law says, it must be priced at the previous rate.

But Miller said San Francisco’s ordinance goes further by prohibiting property owners from expanding, renovating or making other changes to the site within the 10-year period.

She noted that the Ellis Act entitles evicted tenants to “reasonable” relocation costs and to advance notice of evictions — 120 days for all tenants, one year for the elderly or disabled who have lived there for a year or more. And if the owner returns the unit to the rental market in less than two years, both the tenant and the city can sue for punitive damages.

The case is Small Property Owners of San Francisco Institute vs. San Francisco, S248873.

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @BobEgelko