Property rights watchdog Pacific Legal Foundation has filed a federal court challenge to San Francisco’s new “Relocation Assistance Payment Ordinance,” which requires landlords to pay relocation fees when taking a rental property out of service.
The PLF agrues that these payments are “oppressive and unconstitutional” sums of money given they have to be made before the owners can regain personal use of their property, while the tenants can use the money for any private purpose they wish.
Attorneys filed the challenge on behalf of homeowners Daniel and Maria Levin, a married couple who own a small two-unit house on Lombard Street. They live in the upper unit, but are effectively denied the right to take occupancy of the lower unit, because of the costly payment — $117,000, in their case — required by the new ordinance.
PLF attorneys also represent two associations of residential rental property owners, the San Francisco Apartment Association and the Coalition for Better Housing, as well as Parklane Associates, owner of an apartment building subject to the ordinance. Donor-supported PLF represents all plaintiffs without charging attorneys’ fees.
“The city is essentially forcing people to become permanent landlords, by making it wildly expensive to withdraw a unit from the rental market and take possession of their own property,” said PLF Principal Attorney J. David Breemer. “This has nothing to do with ‘relocation assistance,’ because the money that people like the Levins are required to pay to their tenants doesn’t have to be used for relocation. It can be used for anything. In short, this law amounts to out-and-out confiscation. But the officials who passed it forgot about one thing: The U.S. Constitution. The Constitution protects property rights for everyone, including rental property owners. Government can’t pull a shakedown on anybody, not even folks who own rental property in San Francisco.”
Under the new law, an owner who wants to withdraw a unit from the rental market must give the tenant a gigantic payment. The amount is the difference between the tenant’s current rental payment for the full year (usually at a rent-controlled rate) and the cost of a comparable rental property on San Francisco’s open market; this sum is then multiplied by two (years). This payment requirement is retroactive: It applies even to property owners who completed all legal processes to withdraw a unit from the rental market before the new law took effect.
Through the ordinance, San Francisco is forcing landlords to make substantial payments to tenants without any conditions on how the money is spent. Breemer argues this is a “taking” for private gain, not “public use,” as required by the Fifth Amendment.
The case is Levin, et. al., v. City and County of San Francisco. More information, including the complaint, a video, blog post, and a podcast, may be found at PLF’s website: www.pacificlegal.org.
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