Tuesday, May 22, 2007

Ellis Act loophole closing

My colleagues and I unanimously adopted an ordinance to close a loophole that threatened the city's supply of rent-stabilized apartments.

Under a California law known as the Ellis Act, landlords may exit the business of renting residential property by converting their property to commercial or for-sale residential, with some restrictions. This has resulted in a loophole allowing property owners to demolish their rent-stabilized apartment buildings and build new apartment buildings with no rent restrictions.

The law we passed, without placing undue burden on property owners, will stop people from bending the rules to evict low-income tenants and will encourage the production of new affordable housing.

Under the new law, if a landlord evicts the tenants of an apartment building with the intent of leaving the rental property business, demolishes the building, and builds a new rental building, there are two options.

First, the owner may raise the initial rents to market levels. Further rent increases in the new building are then regulated under the terms of the Rent Stabilization Ordinance.

If the owner prefers, he or she may designate up to 20% of the building's units affordable to tenants earning 80% or less of the area median income. A building with 20% affordable units may then take advantage of the available building-envelope incentives regarding parking, setbacks, and height.

(Properties with four units or fewer where the owner occupies one of the units are exempt from these provisions.)

Today's unanimous vote signalled a meaningful policy victory. It's one piece of the puzzle. We need to do a lot more in order to create housing at all levels and seriously address the housing crisis. Stay tuned.