D EVELOPMENTS IN L OCAL L ANDLORD -T ENANT L ITIGATION 1

Rents in the City have substantially increased over the past 3 years, due to: Booming local tech and biotech companies Bringing tens of thousands of new employees to the city Dismal failure of the city over the past 20 years to approve new housing projects 2

What is the SF BOS solution to this problem? Blame itself and take steps to speed approval of new housing? NO Blame and vilify landlords? YES Pass laws to punish landlords? YES 3

Brief overview of 4 pending cases illustrates how the City is attempting to punish owners and discourage them from exercising their rights 4

Levin, Park Lane, SFAA and CBH v. City & County of San Francisco 2014 ordinance requires owners who Ellis their buildings to pay “relocation fees” equal to 24 months’ rent differential between their current rent and the FMV of a comparable unit Levins would have to pay $118,000; Park Lane would have to pay + $1 million Federal Court struck the ordinance down as an unconstitutional taking 5

– “The ordinance fails because it seeks to force the property owner to pay for a broad public problem not of the owner’s making” – “The owner’s withdrawal of the unit did not cause the rent differential gap as the rent controlled rate enjoyed by the tenant is of the city’s making and the higher rent the tenant might pay is of the market’s making” 6 Court said:

City subsequently amended the ordinance to reduce the payment requirements to $50k – The amended ordinance was struck down by the SF Superior Court in Coyne v. City & County Both cases are on appeal 7

SFAA, CBH, SFAR v. City & County of San Francisco Ordinance imposes a 10-year merger ban on any building with an Ellis Act eviction For example, it prohibits a couple that own a house with a small in-law unit and evicted the tenant to create a bigger home for their growing family would have to wait 10 years before they could get a permit to connect the in-law unit to the rest of the house 8

Plainly intended to discourage property owners from exercising their rights under state law, the Ellis Act After three separate hearings and considerable briefing, the Superior court issued a 23 page decision striking down the section as preempted by the Ellis Act Case is on appeal 9

200 Arguello Associates v. Dyas Costa Hawkins Rental Housing Act gives owners the right to increase rents to market when the original occupants no longer reside in the unit BUT: SF Rent Board regulations give the tenant the right to challenge such increases in hearings before the Board and the mere filing of a tenant petition freezes the rent increase 10

In this case, the so-called tenant was a live- out housekeeper for a well-to-do family who were guarantors of the rental agreement The housekeeper left and was replaced by another; the owner sought to increase the rent to market and the tenant and guarantors filed a petition with the Rent Board 11

Because the Rent Board does not allow the landlord to discover facts to support its case, the landlord withdrew the rent increase notice and filed a lawsuit for declaratory relief in court where he would have the right to discovery to prove his case 12

The new tenant and her guarantors sought to dismiss the lawsuit and force the landlord back before the Rent Board and won in the Superior Court The landlord appealed and the case will be set for oral argument soon 13

SFAA, CBH, SPOSF, SFAR v. City & County of San Francisco (Buyout Ordinance) Ordinance discourages buyout agreements between a tenant and landlord for the tenant to vacate a unit Prohibits a landlord from speaking with a tenant about even the possibility of a buyout until: 14

– The landlord serves the tenant with a 3 page form prepared by the Rent Board that contains names and phone #s of tenant advocacy groups and advises the tenant need not enter a buyout agreement – The tenant signs the disclosure form – The landlord files with the Rent Board a declaration containing the name of each tenant the landlord intends to negotiate with and address 15

This is a silly law that discourages landlords and tenants from talking about buyout negotiations that are mutually beneficial—for example, a tenant wants to end a lease early to take a job in another city, or care for an ill relative elsewhere The lawsuit challenges these and related provisions of the ordinance on Free Speech grounds 16

The City won the first round in federal court but the case is on appeal One final point: you can avoid complying with the buyout ordinance by first bringing an unlawful detainer lawsuit against the tenant, then entering negotiations 17

Kim Ordinance: enacted late 2015, is likely to generate legal challenges Prohibits rent increases based on addition of occupants, even where the rental agreement permits such increases Allows – 2 persons in studio – 3 persons in one bedroom – 4 persons in two bedroom – 6 persons in three bedroom – 8 persons in four bedroom 18

Landlord can petition for rent increase due to increased costs caused by additional occupants, but... No lawsuits yet filed against ordinance, Rent Board decisions are being monitored for abuses 19