The News

Common Ground

Rental housing industry groups sue to overturn permanent prohibition on evictions.

Editor’s Note: State and Federal guidelines and legislation are constantly changing regarding COVID-19 and the shelter-in-place order. For the latest information, resources, financial aid, and forms, visit www.sfaa.org or www.caanet.org/coronavirus. 

The San Francisco Apartment Association, San Francisco Association of Realtors, Coalition for Better Housing, and Small Property Owners of San Francisco Institute filed litigation against the City and County of San Francisco in California Superior Court over its newly enacted COVID-19 Tenant Protection Ordinance. The housing industry is also seeking a temporary restraining order, which will suspend the law immediately.

The COVID-19 Tenant Protection Ordinance (the Ordinance) was enacted on Friday, June 26, 2020 after it was signed by Mayor London Breed. The Ordinance permanently prohibits a residential landlord from pursuing an eviction for nonpayment of rent due to COVID-19. In prohibiting residential landlords from ever accessing the unlawful detainer procedures, the Ordinance forces property owners to try to collect unpaid rent through civil claims or by hiring a collections agency. These processes take years and are rarely successful.

In prohibiting housing providers from accessing unlawful detainer procedures, the Ordinance violates Constitutional and state law, conflicts with Governor Gavin Newsom’s Executive Order on preemption and evictions, and, as drafted, will ultimately lead to more evictions as tenants are falsely led to believe that they can just stop paying rent.

SFAA Executive Director Janan New stated: “During this pandemic, our members have been proactive in offering rent reductions, forbearance, and working out flexible payment plans for their residents experiencing financial hardship due to COVID-19. But this ordinance goes too far. No housing provider wants to evict, but by taking eviction for nonpayment of rent off the table, this ordinance will make it impossible for mom-and-pop landlords to collect the unpaid rent that they rely on for their mortgage, property taxes, maintenance, and utilities.”

Noni Richen, President of the Small Property Owners of San Francisco Institute, added: “This law, along with the closure of the court system, would allow renters to live rent-free from March 2020 to potentially September and beyond— and property owners would have no legal recourse to recoup unpaid rent. Small owners are particularly hard hit by renters who cannot pay. We need the courts to intervene.”

In mid-April, the plaintiffs warned the city that the Ordinance would have the unintended effect of increasing residential evictions. The city was also warned that its actions of passing such irresponsible legislation could force it to pay the housing industry’s attorney fees at a time when the city budget is being stretched to address many other needs.

San Francisco Association of Realtors President and CEO Walt Baczkowski noted: “We need a stay to put this law on hold immediately. By purporting to prohibit evictions for nonpayment of rent, some renters will inevitably rely on the Ordinance and will stop paying rent during the COVID-19 period without budgeting to eventually repay the amount of rent owed. When this law is overturned, those renters will be in a tough position and housing providers will have no choice but to exercise their unlawful detainer rights in order to collect the unpaid rent.”

The financial harm of COVID-19 has not been limited to residential tenants. The plaintiffs are sympathetic to renters who have lost their jobs and are unable to pay rent due to COVID-19, and each group has dedicated significant time and resources to ensure that its members are proactively working with their commercial and residential renters to keep them in place.

However, each group involved in this litigation has members who have also been significantly harmed by COVID-19. While surveys have shown that 97% of renters in apartments have continued to pay their rent during this crisis, small property owners and owners of “Class C” properties tend to be particularly impacted and harmed when tenants do not pay rent. The plaintiffs will continue to work with City Hall to identify and implement policies that more equally balance the interests and needs of renters and rental housing providers.

November 2020 Ballot Measures
California voters will see 12 statewide measures on the November 3, 2020 ballot. Of these measures, local property owners should be aware of the following:

Proposition 15:
This measure would change Proposition 13 of 1978 so that larger commercial and industrial properties would be reappraised more frequently than only when the properties are sold. The tax revenue would fund school districts and local governments. Prop. 15 would not change the existing residential property tax laws.

Proposition 19:
This measure would allow people age 55 and older and victims of wildfires and other disasters to keep their lower property tax rate when moving to new homes.

Proposition 21:
Also known as Prop. 10 2.0, this measure would repeal the Costa-Hawkins Rental Housing Act. Prop. 21 would allow cities and counties to impose rent control however they choose—even below the rate of inflation—on buildings fifteen years or older. It would also allow cities to impose vacancy control. The ballot measure is a major threat to housing providers, and the Prop 10 campaign in 2018 needed to raise over $70 million dollars to be successful. The Prop 21 campaign staff has estimated that they will need to fundraise the same amount for this year. Just like in 2018, all SFAA and CAA members are being asked to donate $100 per apartment owned/managed to the campaign. Please visit www.CFRH.org or www.sfaa.org for additional information. 

SFAA Updates
As SFAA pivots to provide you services during the shelter in place mandate, there is a new way to connect with SFAA. Email MemberQuestions@sfaa.org to have your questions and concerns promptly addressed.

The annual SFAA Trade Show will be virtual this year (more information coming soon).  At the September 3 event, attendees will learn all about the latest trends, products and services in the multifamily housing industry. The event is free and open to the general public, so invite your friends. For more information on the trade show or to become a sponsor, contact vanessa@sfaa.org.

The SFAA Rent Forbearance Form and information on temporary rent reductions are available at www.sfaa.org.

SFAA classes will be available online during shelter-in-place. The San Francisco Apartment Association is happy to announce that current CCRM students can continue their education during the Shelter-in-Place right from home. We understand keeping up education is crucial and want to assist our members to stay up to date. Thus we will be setting up more webinars in the future. See the calendar on page 48 for a full list of classes.

The SFAA office will remain closed during the shelter-in-place mandate. However, SFAA staff is working round-the-clock to keep the nonprofit running. Timely payment of membership dues is necessary to help the association help you.