Existing law, commonly known as the Ellis Act, generally prohibits public entities from adopting any statute, ordinance, or regulation, or taking any administrative action, to compel the owner of residential real property to offer or to continue to offer accommodations, as defined, in the property for rent or lease. Existing law qualifies this prohibition by, among other things, permitting a public entity to require an owner to provide notice that he or she has initiated actions to terminate tenancies and, in this situation, the date of withdrawal of accommodations would be 120 days from the delivery of the notice. Existing law extends the term for the withdrawal of accommodations, in this context, to one year if the tenant or lessee is 62 years of age or older, or disabled, and other conditions are met.

This bill would extend the term for withdrawal of accommodations to one year for all tenants and lessees without regard to age or disability. The bill also would make conforming and other changes to eliminate conditions linked with the one-year term exclusive to tenants or lessees that are at least 62 years of age or disabled.

Date of Hearing: May 10, 2017

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

ABPCA Bill Id:AB 982 (

Author:Bloom) – As Introduced Ver:February 16, 2017

SUBJECT: Residential real property: rent control: withdrawal of accommodations

SUMMARY: Would extend the term for withdrawal of accommodations under the Ellis Act (Act) to one year for all tenants and lessees without regard to age or disability.

EXISTING LAW:

1. Prohibits, under the Act, a public entity, by statute, ordinance, or regulation, from compelling an owner of any residential real property, except for a residential hotel meeting specified requirements, to continue to offer the rental units for rental housing (Govt. Code Section 7060 et. seq.).
2. Provides that 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 (Govt. Code Section 7060).
3. Provides 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 (Govt. Code Section 7060.1).
4. Provides that in rent-control jurisdictions, the rent control ordinance may require owners to give notice before withdrawing the building from 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, provided they have lived in the accommodations for at least one year prior to the date of delivery to the public entity of the notice of intent to withdraw — before terminating the tenancy. The Act also permits the city to impose other restrictions, conditions and requirements upon the property (Govt. Code Section 7060.4).

FISCAL EFFECT: None

COMMENTS:

Background: In Nash v. City of Santa Monica (1984) 37 Cal.3d 97, the California Supreme Court upheld the power of a city, in the context of a land use ordinance, to require a residential real property owner to obtain a removal permit, under specified criteria, before the owner could demolish his or her rental property and cause its removal from the marketplace. SB 505 (Ellis), Chapter 1509, Statutes of 1985, preempted a local government's authority to compel a rental property owner to stay in the rental housing business by prohibiting a local government from enacting or implementing any law to compel a residential real property owner to offer, or continue to offer, the property for lease or rent.

The Act only applies when an owner seeks to remove all the units within a building, or all units on a property with a building containing three or fewer units, from the market and only has real effect in cities or counties with rent control and just cause evictions. The Act authorizes local governments to place restrictions on how property owners can "Ellis" a property and exit the rental property market. An owner can be required to give tenants 120 days' notice that the property is being withdrawn from the rental market. Tenants who are over 62 or disabled must receive one year's notice, provided they have lived in the accommodations for at least one year. Owners are required to re-rent a unit, at the rent control amount at the time the unit was withdrawn, if they offer it for rent within five years of filing to withdraw or withdrawing the property.

This bill would require all tenants to be given a minimum of one year's notice, regardless of whether the tenant is over 62 or disabled.

Need for this bill: The author contends that "it is reasonable, just and humane to provide tenants with one year's notice so that they may find new accommodations that they can afford as well as give cities time to also help tenants find new affordable housing if they need it. This especially helps families with children who need more time to find housing within the same school district and helps not disrupt the child's school year." The author points to a UCLA study released in 2014 which found that Los Angeles is the most unaffordable rental market in the country (See http://www.anderson.ucla.edu/Documents/areas/ctr/ziman/2014-08WPrev.pdf).

Arguments in support: Supporters note that California has lost nearly 30,000 rent-controlled units due to Ellis Act evictions, and there has been an uptick in recent years- particularly in the Los Angeles region. The City of West Hollywood points to the severe shortage of affordable housing in the Los Angeles region, and contends that the Act has contributed to this shortage in West Hollywood. According to supporters, 120 days is not sufficient notice for tenants to find comparable housing, and many are forced to move out of their communities. In supporters' view, expanding the notice period to one year for all tenants would help curb abuse of the Act, ensure that tenants have sufficient time to relocate to new housing in a competitive market, and allow up to a year for the market to absorb those tenants seeking housing as the result of the displacement.

Arguments in opposition: Opponents contend that extending the notice period to one year will mean that many small property owners, their families, grandparents, and school age children cannot move into their own homes without extended delays. In addition, for those owners who are not able to financially operate their properties, significant delays will only lead them into further financial difficulty. Opponents also suggest that, if the Act were to be amended to provide everybody with one year's notice, the law must also be amended "to address those tenants who abuse the legal system with technical arguments simply to delay the eviction process after the one-year period."

Staff comment: As documented in the media, Ellis Act evictions have increased in recent years. A 2016 investigation by the Los Angeles Times revealed that 1,137 rent-controlled units in Los Angeles were removed from the market in 2015--a number that has almost tripled since 2013, while the number of evictions from rent-controlled units has doubled. Across Los Angeles, over 20,000 units have left the market since 2001. In Santa Monica, Ellis Act evictions jumped 75 percent between 2013 and 2014, according to a 2015 report by the Anti-Eviction Mapping Project.

The removals peaked during the housing bubble, bottomed out in the recession, and have risen significantly since then. As the Times investigation notes, many of the recent evictions have been carried out by developers who have purchased the buildings with the intention of demolishing them to construct pricier housing. At least 51% of the Los Angeles properties removed under the Act in 2013 had been purchased within the previous year.

Related legislation:

AB 423 (Bonta, 2017): Would exempt residential hotels in the City of Oakland from the Act beginning January 1, 2018. This bill is pending on the Assembly Floor.

SB 1267 (Allen, 2016): Would have required a city or county by ordinance, when the city or county requires notice of intent to withdraw accommodations pursuant to the 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. This bill died in the Senate Transportation and Housing Committee.

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 Act unless all owners in the property have held their ownership interest for at least five years. This bill failed passage 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 948 (Alarcon), Chapter 968, Statutes of 1999: Made numerous changes to planning and zoning law, including changes to the Act that increased the time when a unit may be withdrawn from the market from 60 days to 120 days after notice is provided to the public entity. Increased the time when a unit occupied by a tenant who is disabled or at least 62 years old may be withdrawn from the market to one year after notice is provided to the public entity.

REGISTERED SUPPORT / OPPOSITION:

Support

California Rural Legal Assistance Foundation

City of Santa Monica

City of Santa Monica Rent Control Board

City of West Hollywood

Housing California

Western Center on Law and Poverty

Opposition

Apartment Association, California Southern Cities

Apartment Association of Orange County

California Apartment Association

California Association of Realtors

California Building Industry Association

California Business Properties Association

California Chamber of Commerce

East Bay Rental Housing Association

North Valley Property Owners Association

San Diego County Apartment Association

Small Property Owners of San Francisco Institute

Analysis Prepared by: Rebecca Rabovsky / H. & C.D. / (916) 319-2085