State court rejects SF bid to limit Ellis Act evictions

A state appeals court on Monday rejected San Francisco’s latest attempt to restrict tenant evictions under the state’s Ellis Act, an ordinance requiring landlords to wait 10 years before merging rental units into one residence that they could sell as a single-family home.

The Ellis Act, backed by the real estate industry and passed in 1985, allows property owners who decide to go out of the rental business to evict their tenants. Cities intent on preserving their supply of rental housing have tried to set conditions on landlords — a previous San Francisco ordinance, struck down by the courts in 2004, would have required the owner of a residential hotel to provide replacement housing, or pay a fee to the city, before evicting all tenants.

The city’s latest ordinance, sponsored by Supervisor John Avalos and enacted in December 2013, would bar owners from merging units within a building for at least 10 years after evicting tenants who have not violated any rules or done anything else to provoke their departure. Most no-fault evictions are based on the Ellis Act, and the court noted that a common reason for merging tenant units is to convert a multiunit rental building into a marketable single-family structure. Another reason is to convert a duplex to a home for the landlord’s family.

In a suit by the San Francisco Apartment Association and allied groups, Superior Court Judge James Robertson struck down the city ordinance in December 2014, saying it conflicted with the Ellis Act by penalizing property owners who were within their rights under the state law. On Monday, the First District Court of Appeal in San Francisco agreed.

San Francisco’s measure “prevents landowners from exercising their right to simply go out of business,” Justice Martin Jenkins said in the 3-0 ruling.

A city can restrict housing demolitions and take other steps to regulate land use and maintain its housing stock, Jenkins said. But he said the San Francisco ordinance was intended to “discourage or penalize Ellis Act evictions,” and cited language in the text of the ordinance that said it would “create a disincentive to evict.”

Although the city “may have been motivated in part by the worthy goal of preserving the stock of affordable housing,” Jenkins said, its ordinance amounts to “local intrusion” into a subject the state has chosen to regulate, a landlord’s right to evict tenants in order to withdraw from the rental housing market.

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