Bill to restrict Ellis Act evictions in S.F. hangs by a thread

Noemi Sohn, a Mission District renter, stands up to support SB 364, which would reform the Ellis Act in San Francisco, at a Senate Committee hearing in the State Capitol in Sacramento, Calif. on Tuesday, April 14, 2015. State Senator Mark Leno authored SB 364. less Noemi Sohn, a Mission District renter, stands up to support SB 364, which would reform the Ellis Act in San Francisco, at a Senate Committee hearing in the State Capitol in Sacramento, Calif. on Tuesday, April ... more Photo: Paul Chinn, The Chronicle Buy photo Photo: Paul Chinn, The Chronicle Image 1 of / 18 Caption Close Bill to restrict Ellis Act evictions in S.F. hangs by a thread 1 / 18 Back to Gallery

SACRAMENTO — A state lawmaker’s effort to severely restrict a new landlord’s right to evict tenants in San Francisco using the Ellis Act was hanging by a thread after a legislative committee rejected the bill Tuesday but kept open the opportunity for a second vote.

Hundreds of San Franciscans showed up at the state Capitol to weigh in on the effort by State Sen. Mark Leno, D-San Francisco. Leno is trying for a second year to pass the San Francisco-specific bill, even after a recent city report showed that San Francisco experienced a nearly 50 percent drop in Ellis Act evictions in the past 12 months compared with the previous year.

SB364 was rejected on a 6-5 vote in its first hearing before the Senate housing committee after a long list of speakers, including San Francisco Mayor Ed Lee, urged the lawmakers to help the city fight speculators who profit from flipping rent-controlled housing units on the backs of vulnerable residents.

“I’m tremendously disappointed,” Leno said after the vote. “Deep-pocketed speculators are sweeping up properties in our city, only to quickly vacate and resell them for a profit. … It is terribly unfortunate that some of my colleagues in the Senate do not recognize the dire need for this legislation in San Francisco.”

In a lengthy hearing, San Franciscans told lawmakers the emotional stories behind their support for or opposition to the bill, from seniors and low-income families who have been evicted to small-property owners who worry their own families would be financially harmed by making it more difficult to evict tenants.

The bill would require property owners to own a building for five years before being able to evict tenants under the Ellis Act. Leno’s next attempt to persuade the Senate housing committee to approve the legislation could come as early as next week.

The 1986 Ellis Act allows property owners to evict tenants in order to get out of the rental business, but it has also been used by speculators, who buy rent-controlled properties and evict tenants so they can flip a property for profit.

“This is being abused by a small group of folks,” Leno said. “Our most valuable affordable housing stock is our rent-controlled stock. One would never use the Ellis Act in any area that isn’t rent-controlled, because if it’s not rent-controlled and you want tenants out all you have to do is raise your rents to beyond what your tenants can pay and they’re gone.”

Jay Cheng, deputy director of the San Francisco Association of Realtors, said the bill hurts small-property owners and could have the unintended effect of driving up Ellis Act evictions by making it more lucrative to ensure properties are vacant at the time of a sale, since new buyers won’t be able to remove tenants until they’ve owned a building for five years.

“We agree there is an issue with affordable housing and displacement,” Cheng said. “Elected officials aren’t willing to spend the money to solve the problem.”

Lee said that in the past 1½ years the city has built 4,300 housing units in San Francisco, 30 percent of which are affordable housing and 51 percent low- to moderate-income housing.

“I don’t want to build housing because of what we’re losing,” Lee said. “This is a narrow loophole we are trying to close. … The intent of the Ellis Act was not to reward speculators.”

Lee and Leno partnered last year on a similar Ellis Act bill, which narrowly passed the Senate before stalling in the Assembly housing committee amid opposition from Realtors and property owner associations.

But data recently released by the Rent Board showed a one-year, 48 percent decline in Ellis Act evictions in San Francisco, which recorded 216 Ellis evictions for the rental year ending in March 2014 and 113 Ellis evictions for the year ending in March 2015.

Lee attributed the decline to publicity around legislative efforts to pass an Ellis Act reform bill with Leno.

Lee warned state lawmakers that Ellis Act evictions in San Francisco may rise in the next 12 months after city officials reported a spike in the number of applications in February.

“We need this loophole closed so it can’t be abused in our city,” Lee said.

Melody Gutierrez is a San Francisco Chronicle staff writer. E-mail mgutierrez@sfchronicle.com Twitter: @melodygutierrez