With tenants in rent controlled apartments reporting offers of up to $80,000 to vacate, and unreported offers of even more, a proposed law which would require the public disclosure and tracking of all tenant buyout agreements in San Francisco, and prohibit buildings which are emptied by way of a buyout from being condo converted, could be adopted by San Francisco’s Board of Supervisors next week.

Sponsored by Supervisors Avalos, Campos, Kim and Mar, with Farrell dissenting in committee, the proposed “Tenant Buyout Agreements” ordinance would:

  1. Require notice prior to any negotiation: The proposed ordinance would require landlords to provide tenants with written notice of the tenants’ rights and file a form with the Rent Board indicating which rental unit may be the subject of the buyout negotiations prior to commencing buyout negotiations for a rental unit.  The Rent Board would make this information publicly available, except for information regarding the identity of the tenants.
  2. Require written agreements: The proposed ordinance would require all buyout agreements to be in writing and to include certain provisions regarding the tenants’ rights.
  3. Provide a 45 day rescission period for tenants: The proposed ordinance would allow tenants to rescind a buyout agreement for up to 45 days after its execution by all parties.
  4. Requite buyout agreements to filed with the city and made public : The proposed ordinance would require landlords to file copies of buyout agreements with the Rent Board and pay a filing fee. The Rent Board would create a searchable, publicly available database regarding buyout agreements.
  5. Require an annual reporting of all buyouts: The proposed ordinance would require the Rent Board to provide an annual report to the Board of Supervisors regarding tenant buyouts.
  6. Allow for monetary and civil penalties for failing to comply: The proposed ordinance would allow tenants to bring an action in San Francisco Superior Court seeking monetary damages and civil penalties from landlords who did not provide the pre-negotiation disclosure or include in the buyout agreement the provisions regarding the tenants’ rights. The proposed ordinance would authorize nonprofit tenants’ rights organizations to bring an action in San Francisco Superior Court against landlords who failed to file buyout agreements with the Rent Board.
  7. Prohibit condominium conversions for units emptied by way of a buyout: The proposed ordinance would prohibit condominium conversions in buildings where a senior, disabled, or catastrophically ill tenant has vacated a unit under a buyout agreement after October 2014. The proposed ordinance would also prohibit condominium conversions in buildings where two or more tenants who are not senior, disabled, or catastrophically ill have vacated units under buyout agreements, if the agreements were entered after October 2014 and within the ten years prior to the condominium conversion application.

UPDATE:  The proposed law to regulate and restrict the buyouts of tenants in San Francisco has been passed by the Board of Supervisors in a vote of 7 to 4 with Supervisors Breed, Farrell, Tang and Wiener opposing.

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Comments from “Plugged-In” Readers

  1. Posted by soccermom

    Thanks for the summary.

    Does anyone have an explanation for why this does not make a straight Ellis Act approach even more attractive? If one has to jump through all of these hoops for a voluntary negotiation, why not pull the ripcord and let the state law work? So that you can give the SFTU and the public defender some opportunity to blow up your voluntary buyout on a bogus procedural technicality?

    Is it the 5 years that one would conceivably have to ride out? I suppose that is the counterargument, but (rhetorical) won’t this sort of rule make the “leave the building empty for 5 years” breakeven point even closer? A net effect of taking units out of the rental stock and not being re-occupied by renters or owners for 5 years?

    Where in any law have so many required so much protection from receiving a windfall payment?

  2. Posted by San FronziScheme

    Indeed this will make an Ellis much more attractive.

    Buy outs are a big win for tenants. The typical case will be tenants who pay less than 1/2 market rent. Say a tenant pays 1500 for a 2BR worth 4000. Say he collects a buy out of 75K. This means he lived for free for the past 4 years.

    Free rent, even better than cheap rent.

  3. Posted by CB

    Is the buyout taxable income for tenant ? New to SF, have to say I amazed by the good intentions in the service of inadequate ideas…

    • Posted by MysteryRealtor

      Yes. The IRS taxes you on all income earned world-wide, whether or not it’s been reported to them. (Remember Al Capone)

      • Posted by gribble

        Can we issue a 1099 for any free rent negotiated?

    • Posted by c_q

      buyout is definitely taxable – and with all the ‘public records’ required it will make it real easy for the IRS to go after these folks. And don’t forget the state FTB will want their cut too.

  4. Posted by thoughtful

    this is questionably legal and probably not enforceable. How can you stop two private parties from making a bi-lateral voluntary agreement? You can’t. Not any more than we can pass a law that says you have to register with the city anytime you offer to pay someone $5 to stand on your head and cackle like a chicken. Moreover, I’ve always thought and still strongly believe that tenant buyouts are the ultimate expression of tenant power and don’t think it should be changed. There is no loser in the buyout situation, tenant included.

    If an Ellis Act is inevitable final outcome that is to be averted and is not at all in the control of the tenant, driving your own price much higher than you’d get from an Ellis seems like a much better outcome. Also, the highly questionable premise of this legislation is the assumption that an Ellis Act is hanging over the heads of most or all tenants who take buyouts. That is not the case.

    I know several people who have taken buyouts when Ellis Act was not a real viable option for the landlord was going to exercise, it merely opportunistic. In fact, I was the recipient of just such a case. I knew it would take my landlord at minimum 1-2 years to go through that headache and the sick elderly tenant below me would make it all the more unpalatable for the landlord who would risk becoming a pariah in the city he lives. And the landlord had already exercised his owner-move-in-eviction in another unit. So I knew I could pretty happily stay unmolested indefinitely in my unit without fear of being evicted. My life situation changed as did the economy which meant finding another place was a reasonable path forward, so I jumped at some free money and we found a mutually beneficial financial arrangement that worked for both of us. Win win. We were both happy and parted ways on good terms.

    • Posted by soccermom

      “risk becoming a pariah in the city he lives.”

      I appreciate you outlook on the benefits of a voluntary buyout. I would add that MHO is that in a city where the Bay Guardian can’t survive, and the BOS is bent on charging 2 unit landlords 24% sales tax on their properties, the notion of an Ellis Act action as unspoken “pariah” grounds is rapidly changing beneath the feet of the local pols and editorial boards. This is not the right way to run a city.

    • Posted by San FronziScheme

      Yes, during an Ellis the press is going to make a pariah of you, just like the 3 landlords or 460 Noe Street. Then the “disabled” tenant who of course couldn’t imagine living anywhere else takes the money and to the high desert.

      As I said many times before, it’s all about money. People want cheap rent. People want a fat buyout. Ellis is the best way NOT to reward greedy tenants.

      • Posted by Brendan

        Greedy tenants? Ridiculous. In San Francisco, your property values have increased at a surreal rate. Your tenants have paid your mortgage and in most cases received no tax deduction. You receive depreciation benefits and tax deductions, and ultiately, should you decide to sell your gold egg, you enjoy the thrill of buyers tripping over themselves to pay you hundreds of thousands above your asking price. The GREED is all on one side: yours. San Francisco tenants who take a $75k payment aren’t gaining much when faced with having to pay current market rents. That payment will quickly evaporate.

        • Posted by Is This Thing On

          I know, right? Every month my landlord now collects FOUR TIMES what he collected monthly 10 years ago, on the other 5 of the 6 units in my building, while putting almost nothing into the building. Poor guy, my rent control is so hard on him! What a tough deal he’s got! Funny, I’m not paid 4 times what I was paid 10 years ago.

  5. Posted by Greg

    More legislation…that is pro-tenant on the surface but just hurts everyone in the long term. Politics as usual in SF. This will cause a spike in Ellis Act evictions which the supes can turn into another political issue to pander to the tenant vote.

  6. Posted by R

    This is kind of a win for landlords and a loss for tenants. Since these will now all be above board, landlords will be forced to 1099 the tenant, and then be able to claim these buyouts as an expense taxes, and the tenants will be forced to pay taxes on them, taking away 30-40% of their windfall.

    Good job supervisors!

    • Posted by lyqwyd

      It is already above board. Any owner with any sense would already send a 1099 for a buyout.

  7. Posted by soccermom

    What’s more, if Justice Breyer puts back the higher Ellis payouts in the Levin Case, you are looking at the old fashioned (reduced) Ellis payouts vs. this peculiar system. (If Oprah wants to give away cars on her talk show, she’s going to have to give formal notice in advance to the people getting them!) It makes the Ellis call even easier.

    I just checked the Pacer files and indeed the Pacific Legal Foundation seems to be hammering the Nollan/Dolan aspect of their criticism of the law a failure to meet the “nexus” test:

    From the Pac Legal Brief dated October 15th:

    (posing the Nollan issue as: “Is there a sufficiently close nexus between these burdens and ‘the end advanced as the justification for [them]’?”) (quoting Nollan, 483 U.S. at 837); Burton v. Clark County, 958 P.2d 343, 356-57 (Wash. Ct. App. 1998) (“[T]he government must show that its proposed condition or exaction (which in plain terms is just the government’s proposed solution to the identified public problem) tends to solve, or at least to alleviate, the identified public problem.”); Frank Michelman, Takings, 1987, 88 Colum. L. Rev. 1600, 1607-14 (1988) (noting Nollan’s “semi-strict or heightened judicial scrutiny of regulatory
    means-ends relationships”).

    Applying the means-ends inquiry here, the enhanced Payment cannot be reasonably related
    to the Ordinance’s goal of replacing a tenant’s rent control housing so tenants can stay in
    San Francisco because it transfers money directly to tenants without any constraints on where or
    how tenants use it. They may use it in the city or they may decide to go across the Bay Bridge to
    a less expensive area, pay the same amount as before, and use the money from the Payment for
    other desires. They may use some for housing and some to take care of their personal wish list.
    They may decide that, with a $100,000+ of landlord money in hand, they want to leave the Bay
    Area altogether and simply travel for a while. For these reasons, any connection between the
    Payment and the Ordinance’s goal of supplying tenants with San Francisco housing is “indirect
    and conjectural,” and therefore, insufficient for Nollan. Seawall Associates, 542 N.E.2d at 1068
    (connection between apartment restrictions/exactions and goal of providing housing for homeless
    was “conjectural” and insufficient to satisfy Nollan when restrictions did not reserve or ensure any
    units for homeless).

  8. Posted by JustLooking

    Question – Are landlords required to 1099 (misc. income form from the IRS) the tenants that receive these payments? I would think so, but don’t know the specifics?

    Related. If this is considered income to the tenant, could the tenant make the argument that the payment received is for the transfer of a capital asset (occupancy rights) and thereby argue for long-term capital gain treatment on their tax return?

  9. Posted by MysteryRealtor

    Of course the tenant receives a 1099. Why wouldn’t they be taxed?

    • Posted by SFrentier

      This depends on the LL’s motivations.

      Like someone else mentioned above, I have also had very harmonius and non acrimonious tenant buy outs. It was negotiated between us, I gave them what they wanted, I thought it was fair. No lawyers were used in either side. I already had a good buyout agreement, and used that as a template.

      So in cases like these I had nor motivation to stick it to the tenant. If, however, I had a nasty buy out, with the tenant getting a jerk lawyer in his side, you bet your ass I would 1099 them! But so far I have been very successful in my tenant relations. Matter of fact, they often agree with me that they mistrust the local politicians, rent board, and tenant lawyers! It feels great having the tenant agree with you that it’s a huge negative for both sides to deal with all these ordinances, regulations and the need for prick layers to control the outcomes!

      Matter of fact, there isn’t a tenant I had a buy out with that wouldn’t say hi to me and ask me how I was doing. So screw you SF politicians, ordinances, rent board, etc. go to hell!

  10. Posted by Live Smart

    ^^ How the tenant treats his 1099 income, ie. argue it is a capital gains tax as opposed to income, is between the tenant and IRS. Check IRS regs. to see if this issue has been determined in other jurisdictions. Secondly, if tenant has too much income, it makes sense to categorize as capital gains. However, if tenant is in a lower tax bracket, it may make sense to treat the money as regular income.

    The BOS and progressives must be desperate at this point. I see this proposed law as a reaction to seeing the handwriting on the wall. Unfortunately for them, the private sector always moves at a faster pace than government.

  11. Posted by Live Smart

    Soccermon – thank you for the post on the PLF brief. Thank goodness for the Washington Court of Appeals. It forces the government to prove that its laws and regulations do what it is intended (or sold to the public) to do. No more stupid laws based on ideologies, political favor/hidden agendas, unintended consequences. When voters are misled or apathetic, the Court holds the government accountable. If SF wants to take care of its elderly, middle class, families, working class, teachers, cops/firefighters, nurses, etc., then take the money for “affordable housing” obtained from large private developers and build the necessary properties to house those protected classes of people. Don’t heap on more onerous laws on the few remaining homeowners of rent controlled units who are still in this business trying to do the right thing.

  12. Posted by Conifer

    All of these crazy new laws are intended to make investing in SF residential property — other than for a personal domicile — less attractive. Even if they are challenged in court, which will take some time, they service notice by the left wing that they want to reduce the value of residential real estate. If these supervisors are successful in this, they believe that their sympathizers will continue to live here, and vote to keep them in office. It has nothing to do with right and wrong, but everything to do with political power.

    The problem with this plan, of course, is that in the long term it will not work: San Francisco is changing and there is nothing they can do to stop it. Some day it will be a normal American city again.

  13. Posted by Absolut

    This totally confuses me as I really fail to see how this is pro-tenant at all, even on the surface. At least Ellis restrictions, etc make a lot more sense as far as being better for tenants.

    • Posted by lyqwyd

      Agreed, doesn’t seem pro tenant, nor is it pro owner. It only seems to be pro-lawyer (as there will be lots of legal fees once the lawsuits start) and pro-politician as they will then be able to point to this for the micro contingency that thinks this needs to be regulated. This would never pass at the ballot, which really tells you how ridiculous this law is.

  14. Posted by Conifer

    That is the point. It does not need to be explicitly pro-tenant, as long as it makes owning more onerous. Fewer people want to own, prices go down, changes are fewer, and the comrades stay put, giving the leftists and their ilk more time to run SF.

    • Posted by soccermom

      “Owning more onerous” belongs in the NYT Magazine ‘That should be a word’ column.
      Ownerous: Landlording in [a rent controlled market]

      Also, Conifer, you would appreciate 218 25th Avenue that was just listed in my neighborhood. I would have to side with you that changing or painting or otherwise defacing the wood trim in this place would be a shame. It is as close to original as I can remember seeing in the city.

  15. Posted by Faceword

    This is insane.

    • Posted by San FronziScheme

      STEP ONE – Tenant advocates keep asking more protection
      STEP TWO – Supply shrinks, while demand becomes unsatisfied and frustrated
      STEP THREE – The City becomes more expensive as a result
      STEP FOUR – The increased value makes possible what used to be unthinkable
      STEP FIVE – Sharks get in the water, bite the fish the most fat to chew on

      Go back to STEP ONE, rinse, repeat

  16. Posted by EcceMorons

    Avalos, Campos, Kim, and Mar need to report EVERY voluntary transaction they’ve ever had in their lives, and subject all future transactions to these same regulations.

    If Ms. Kim has ever accepted a gift or dinner of monetary value in exchange for sexual favors, and failed to report the value of said gift/dinner to the IRS, she will be indicted for Income Tax Evasion, and pay all tax due on said earnings, plus penalties and interest.

    Add that to this propose law, in the name of fairness, and I’ll agree to it.

  17. Posted by Mr. Me Too

    Lame! Why go through with this nonsense when it’ll be 10x easier to Ellis? Prior to this nonsense, a LL might have been on the fence like 50%/50% deciding whether to Buyout/Ellis. This nonsense makes the decision more like 100% Ellis all the way. I though the Bored of Stupes were trying to slow down the Ellis? I hope the Federal Judge hearing the case of the obscene Ellis payouts strikes down the recent spate of ridiculous regulatory takings soon, so that law abiding Property Owners can move on with business as usual. Communists = Counterproductive, annoying, economic terrorists!

  18. Posted by Greg

    Honestly, I think Renters should be insulted by this kind of proposal. This level of regulation is the city basically saying tenants are complete invalids and imbeciles.

    • Posted by Is This Thing On

      As a renter? I kind of am. I oppose a lot of the “poor me” landlord bellyaching I’m seeing around here, but this law was unneeded. I don’t think it benefits anyone.

  19. Posted by Alai

    If you look at owning as “a lot of stability at the expense of flexibility” and traditional renting as “a lot of flexibility at the expense of stability”, rent controlled renting is a blend of the two, with more stability than renting but more flexibility than owning– a positive (for the renter). It gives the renter an ownership stake in the property which can’t be easily taken away by the landlord– a stake which is valued somewhere around the buyout cost, growing over time as the rent-controlled rent and the market rent diverge. Every time the city makes rent control stronger, it increases the value of this stake. Most of the animosity and dysfunction right now hinges around the fact that this stake vanishes when the renter leaves, and reverts to the landlord, so landlords have a huge incentive to get rid of tenants by whatever means. Efforts like this law center around making this ownership stake more official and harder to dissolve. The endgame would probably be a law that required landlords to pay renters when they left the apartment regardless of the circumstances, even if they leave voluntarily, turning rent controlled apartments into a sort of co-op or condo arrangement where they are owned by the residents. Presumably that wouldn’t pass muster with the courts, but on the upside, it would eliminate the animosity between tenants and landlords, since there would be nothing to be gained from getting rid of the tenant.

    I think the rise in TICs can be seen through this lens: from a landlord’s perspective, renting out a rent-controlled apartment means transferring the benefits of ownership of it to someone else, while retaining the risk, so why not make it an official transfer and get paid accordingly?

    • Posted by Frog

      I’m not sure you can find a single economist who would agree with that.

    • Posted by San FronziScheme

      Wait, a tenant lives in your building and pays you rent. Then when he leaves voluntarily, whatever the circumstance, you PAY HIM? Am I reading this right? And how much are we talking about? 1 year rent? 5 years?

      Why not skip the wasteful paperwork and give the place for free to the tenant?

      Seriously, this city is full of entitled narcissists who need a get a touch of reality.

      • Posted by Is This Thing On

        You’re omitting facts to make the situation seem like something it wasn’t. How is it out of touch with reality to say that if a landlord wants to increase his own profits by convincing me to give up a substantial savings to myself on rent (IE giving up a rent controlled place), I should simply roll over and give up that savings for his benefit? That’s insane. How in the world would I benefit by doing that, over simply staying put?? Am I derive value from the feeling that I made some foaming-at-the-mouth commenter on the internet happy, or something?

        You’re not paying him for renting from you, or for the simple act of leaving voluntarily. You’re paying him to give up rent control, which has real-world value that accrues month to month. That’s a perfectly fair trade. By not moving out of my current place and into a new one, I save 60% of market rate rent, each and every month. That’s a real benefit to me. You expect me to give that up for free? To voluntarily assume a 150% rent increase, for no reason other than that someone else thinks I should? Talk about needing a touch of reality… I don’t believe there’s a human being alive who operates that way.

        It’s not “entitled” to say that I won’t voluntarily give up a substantial benefit to myself unless I’m offered a compelling incentive to do so. That’s just being sensible. “Entitled” is thinking people should give up real world benefits, at cost to themselves, for you, for no reason other than that it works for you.

  20. Posted by NoeValleyJim

    I was in NYC last week and I talked to some renters there. They said tenant buyouts of rent controlled apartments were more on the order of $100-200,000. Not sure how their laws compare to ours, but I think they don’t have The Ellis Act, so it makes sense that a rent control unit would be worth more.

    • Posted by Greg

      I’m not so sure drawing parallels between NYC and SF would make a fair assessment. Our cities are different on so many levels, both regulatory and market-wise. My guess is the larger distinguishing factor is what New York property owners are able to do with vacant units versus here in San Francisco.

      In fact, I think tenants and owners have many misconceptions when it comes to determining the “market value” for a buyout. Even the $80,000 mentioned in this post is misleading, since that number is an outlier. The average reported in SF is still around $20,000. Sure, some people get high amounts, but you have to ask what plans the owner has for the unit for what they paid to be “fair”.

      • Posted by NoeValleyJim

        What do you mean “what New York property owners are able to do with vacant units versus here…”? What do they do with them that there that we can’t do here?

    • Posted by Truethevote

      One big difference when I lived in NYC in 1995, was once your rent went over $2000, you were no longer under rent control. Here it is totally arbitrary. Why is a bldg. from 1980 exempt but one from 1968 not? Why a condo and not a tic? Utter lunacy!

  21. Posted by Hitman

    Gentlemen make deals on handshakes. You should fear those who want to regulate handshakes or free speech.

  22. Posted by sorrynotsorry

    My buyout agreement had both the first two items – a written contract and they gave notice as to what was going on. Basically the only reason you’d do a buyout rather than follow the city’s compensation formula is to avoid the other points. I did get more than 80K, but following the current average price per square foot differential between having me in the unit and having the building vacant with no Ellis on the title, it was a decent split between me and the new landlord of the increased value of having me gone. Before folks get too het up, it wasn’t an expensive neighborhood when I moved in.

    Too bad we couldn’t have had more development before it was too late – I was champing at the bit to buy one of the moderately priced condos proposed for the Alexandra Theater site years ago. But instead there won’t be any moderately priced homes built at all. Later folks, I’m now a homeowner in the east bay.

    • Posted by San FronziScheme

      How many years of free rent did you end up getting? How do you feel about yourself, having extracted value on property that wasn’t yours? Did you put any downpayment on the property? Did you take a risk on the investment? Did you have to worry with contractors, DBI, etc?

      One thing for sure, you will NEVER rent one of my places because I keep them on the furnished corporate rental segment. My tenants ALL complain they cannot find anything for rent. What you did is the only reason. You cashed out and the rest of the mere mortals suffer. I hope you end up moving to hell or Daly City whichever comes first.

      • Posted by San FronziScheme

        Oh wait. East Bay. Good enough for me. I hope you took one good breath before crossing over because you’re not coming back.

        • Posted by sorrynotsorry

          I feel perfectly fine about being compensated for losing my home and way of life. Everyone got what they needed in my scenario, the developers who bought my rundown, mold infested building for a song are going to make a killing regardless.

          • Posted by Spencer

            it wasnt your home to lose.

          • Posted by San FronziScheme

            Outside of this Bizarro world no renter should be entitled any compensation for RENTING.

            What else? If I rent a car am I entitled a cut of Thrifty’s profit?

      • Posted by Is This Thing On

        Oh, my! My god, I “extracted value on property that wasn’t mine”! However will I live with myself?

        Wake up and smell the capitalism, we’ve got a whole society based on extracting value from other people’s work or risking other people’s money. When the upper economic classes do it people don’t seem to have nearly as much of a problem with the concept.

        How about this: a contract that yields me a savings (my lease) is an asset. MY asset. Boom, accepting a buyout is no longer extracting value from “property that wasn’t mine”, but rather from giving up an asset that most definitely was mine, a lease agreement that the landlord voluntarily entered into with me. You may not like the laws governing that lease or feel they’re fair, but they are what they are and I have the lease. So if he wants me to give up that lease agreement, he can pay me part of the value of that asset—and in the long run, he _still_ gets the better end of the deal, because the subsequent increase in rent collect/paid (respectively) is permanent for both he and I, but the buyout amount is finite. Ok, feel better now?

        Sometimes I get the sense that some people think it’s only fair for them to leverage what they’ve got, not for anyone else to leverage what they’ve got.

    • Posted by Truethevote

      Shame on you. Next time just stick up someone same difference….

      • Posted by Sorrynotsorry.

        Really? Because they initiated a settlement by making me an offer at the low end of what they were willing to pay and then we negotiated via our lawyers. It’s not as if they are developing this property into a luxury unit out of the reach of the average city dweller out of the goodness of their hearts. No gun was to anyone’s head. They got an excellent deal on the property even with the buyouts.

        • Posted by Spencer

          what did you do to earn that $80K.

        • Posted by San FronziScheme

          Lots of rationalizing going there. You found a roll of bills on the floor that is missing from someone else’s pocket. Rules defend you, don’t create strawmen to live better with yourself.

        • Posted by Brendan

          I’m replying 9 months later but, really, why bother answering these idiots? They reap outrageous profits, and collect rents which pay their mortgages, and in most cases do very little work to improve rental properties other than bare maintenance. They believe they’ve done you a favor. Of course you should be entitled to whatever payment you negotiated. A smart owner recognizes that you’re a human being, not a peasant to take advantage of. The owner benefits by having a responsible tenant while holding the investment, which rarely ends other than profitably. If you received $100k, it was money well INVESTED by the owner.

          • Posted by SFrentier

            You’re ridiculous. Tenants pay rent SO THEY HAVE A PLACE TO LIVE. End of story. If you want to pay a mortgage and not rent, go buy property. It’s like me complaining about the price of tortillas in a restaurant, as they buy them for less at wholesale. And the manufacturer buys corn flower, which is cheaper yet.

            And as for real estate being easy and always profitable, tell that to the thousands who lost everything in the 2008-09 crash.

            Buy outs are a particularity to SF (and a few other places) and not the general market. I’ll tell you what: us owners will stop complaint about buy outs and you tenants stop complaining about Ellis acts, omi’s etc. because we’re just following “the law”. Deal?

          • Posted by san FronziScheme

            There are plenty of “responsible tenants” in other states. And when they’re requested to leave they comply and are owed zero dollars. Only in SF, Santa Monica and a few other places will tenants vote themselves ownership rights to someone else’s property.

      • Posted by Absolut

        I don’t think there’s any merit to blaming the tenants in this process, unless they are being unethical in buyout negotiations by falsely claiming disabilities or other special circumstances. All blame goes to the politicians who implemented rent control in the first place and those that continue to support it.

  23. Posted by Conifer

    Willie Brown’s comment in Sunday’s Chronicle, on the Assembly race, pertinent to this discussion of another confiscatory proposal from Campos:
    “The only distinction I can see between the two of them is that Campos is a straight-up communist, and Chiu is a situational communist.”

    • Posted by Hitman

      When Comrade Campos resorts to curtailing free speech rights to protect a failed housing policy, it is indeed communism.

    • Posted by san FronziScheme (formerly known as lol)

      Chiu has no real personality. He only wants to please and stay relevant. In SF, wanting to please means saying all sorts of things that do not make any sense outside of the 7X7, pushing for more regulation to try and shore up the crumbling system.

      Campesino is indeed straightforward. He wants to provide all power to the people (the people being guided by his enlightened self), despite how anachronistic this may seem in 2014.

  24. Posted by Truethevote

    Rent control breeds animosity among two groups that should be partners, tenants and landlords. I am being forced to sell a newly condoed unit because the tenant won’t leave “her home”.
    I paid the property taxes for 12 years. ~ 240k
    I paid the mortgage for twelve years. ~720k
    I paid the insurance for twelve years, including earthquake coverage until it exceeded 18k for a 3 unit bldg. ~ 140k
    I waited three years to participate in condo lottery
    I paid $250 a year for 7 years to buy lottery tickets until I was the last class through the old system.
    I paid 50k to the city to do conversion
    I paid 3k to an atty to do the impossible conversion paperwork.
    It is not her unit, it is mine.

    She had the benefit of living in a well maintained 3 br.
    She cut down from 2 roommates to 1. She could have been saving her 6 figure salary to make her down payment for her own place.
    Through the condo conversion she was given the chance to buy the unit. She declined.
    She instead opted to rent for another year, per condo conversion rules.
    Now the year is up and she is demanding 80k to move out.

    I will elect to play the last card I have through the condo conversion and that is to evict her. I am allowed to do this, but I am forced to sell. That seems fair after I was a law abiding tax payer for the last 12 years. Being sold as a condo it is out of rent control. One less owner to be bullied.
    Wonder why Ellis evictions are up? Because owners no longer have the carrot of conversion, all the sftu gives them is the stick. The more they constrict the owners the more likely the owners will sell.

    Good job tenants Union.
    And yes there is space for the tech person to park both of their Teslas! I am cashing out! Thanks for helping me see the writing on the wall and confirming not to go the buyout route.

    And for the record Shane on sorry notsorry! Your dignity just called to say you left me in SF.

    • Posted by soccermom

      Great story, thanks for sharing.

    • Posted by Sorrynotsorry

      So there would have been more dignity in telling the development company that they could keep the money they offered? Because clearly the lord of the manor is deserving of my tribute. Perhaps I should polish his boots with my tongue while I am at it.

      • Posted by Spencer

        just because someone pulled out their wallet, doesnt mean you have to take what you didn’t earn. There are plenty of desperate people who need help. You were able to buy in the east bay so not so desperate. Did you consider giving this free (or stolen ) money to charity, giving to someone in more need than you?

        • Posted by Sorrynotsorry

          It’s not as if I would have been able to afford rent anywhere in the Bay Area in the long run. And is there anything more unearned than sitting around watching property values rise? Unless you personally created jobs and amenities. no.

          • Posted by Spencer

            some of us hard to work hard, make sacrifices and save for a long time to be able to put down a downpayment. After saving for 15 yrs + to buy a home, its not an easy decision to take a risk with your own money. its called investing.
            what risk did you take? Im glad you bought your place. good for you. You should thank your previous landlord in spades for giving you his free money so you could make your life better.

            for a very rich property owner, buying may be easy and not take a risk. but the vast majority of us work and save very hard to buy, and dont wont to have to pay the extra costs of getting rid of freeloaders.

          • Posted by San FronziScheme

            Not a CEO by far and yet I piled on property over property over 20 years through the good old “patience and hard work”. But people love a shortcut.

            I was shocked to hear my boss talk the other day on how he needed to refi to pay for a stupid remodel. I realized I was many many times more cash rich than him. Yup he loves nice things, but things that do not last.

      • Posted by truethevote

        Yes there is more dignity in saying “I am a self sufficient person and will move on” then to take money that I did not earn. You were willing to live in a mold infested apartment because it was cheap. Supply meet demand. A tenancy should not be a lottery ticket for a tenant nor should it be Russian roulette for an owner. I am dropping the gun (and taking the cannolis).

    • Posted by Absolut

      I’m just curious why you would be ‘forced to sell’ in this situation?

    • Posted by NoeValleyJim

      You forgot to tell us how much profit you walked away with. I am guessing at least $1/2M, probably more like $1M. Am I right? So you were very well compensated for your risk and your efforts.

      • Posted by soccermom

        I have totally bought gas at the same station on Geary for like ten years. If they ever sell, I totally deserve to get some of the profits ’cause, you know, they couldn’t have done it without me. Same with the grocery store where I get my Zatarin’s, and the nail salon where I get my cuticles pushed. They owe me that much. My way of life. Also I pay into parking meters, so I own some of the city. Also when I get my hair cut I pay and so I own some of the salon. Because, you know, everyone HAS to get their hair cut amIright? Like how can they even raise prices on me? They should be charging me the same prices that they ORIGINALLY CHARGED ME, plus some small amount for inflation. HOW ELSE WILL THE COMMUNITY BE MAINTAINED!?!?!?!?!?

        • Posted by NoeValleyJim

          Tenancy is different than buying a service and is recognized as unique in English common law as well as most other legal systems worldwide. San Francisco is no different in that respect.

          • Posted by soccermom

            Great. Give us another example where renting a place for 31 days confers lifetime rent protection status and a perceived equity stake in a property upon the tenant. In most other legal systems world wide, or English common law.

          • Posted by NoeValleyJim

            Most European countries have much broader and all-encompassing rent control laws than we do in San Francisco. If I have time, I will look into them more and get back to you with an example.

          • Posted by San FronziScheme

            Long time Paris landlord here. Even France has an escape clause that allows you to kick out a tenant prior to a sale. I have terminated 8 leases that way…
            And the guy who buys can pretty much do what he wants. Rents are pretty reasonable anywhere in France, even in Paris. They are pegged to average incomes in practice. The reason is that price discovery is very easy, unlike in SF.

          • Posted by BetterSF

            Does Paris has rent control? Can landlord set the rental price and increase at will?

          • Posted by San FronziScheme

            Paris HAS rent control, yes. The annual rate of increase is indexed on inflation.

            Sometimes market rents will increase a bit more than inflation. Then stagnate, because landlords are not stupid and need warm bodies in their place.

            A quick comparison: I rented my first 1BR apartment in Paris in 1989. Price at that time: $650. Today it would rent for $1000 on the open market, or roughly what you’d pay with the allowed rent control raise. 25 years for 60% more is not a crazy increase.

            Now the example of Paris might prove one thing: if you have a clean exit strategy, rents are going to find a reasonable balance. This means people do NOT hog heir apartment and move freely towards what they need and can afford. Free flow of rental property. A working market. In France for Chrissake!

          • Posted by BetterSF

            How did the property value appreciate in Paris since the same period? Is it a good place for investment?

          • Posted by BetterSF

            With the rent control in Europe, no wonder their economy has been stagnant for a long time. I guess it is not a good place for investment, even though with its rich culture and history.

        • Posted by Spencer

          i just sent a message to uber asking for a payout. ive used their service a lot. if they dont pay me out, they must be greedy and evil

          • Posted by San FronziScheme

            Sports Basement owes me $100s. And let’s not talk about Muni.

      • Posted by truethevote

        I did not forget to tell you, 1) I have not sold the property 2) it is irrelevant. So if I have a gain I should be penalized? So if there is a giant earthquake or a huge market correction will the tenant participate in the loss from forcing me to sell?? Please redistribute your own wealth and leave mine alone.

        • Posted by NoeValleyJim

          Yes if you sell your property at a gain, you should pay taxes just like anyone else who makes a profitable business transaction. Do you think that you should not have to pay taxes?

          Should your tenant participate in the gain? I don’t know, but if they are adversely affected by it, and it sounds from your description of events that they will be very adversely affected, then I would seriously consider it. If your actions benefit you and harm someone else, it is only fair that you compensate them for it somehow. $80,000 on a profit of over $1M is not too great a cost to pay. Ownership of land and buildings is not absolute and never has been. This is especially true as every San Francisco landlord (myself included) knows only too well.

          If there is an earthquake the tenant will lose their house and possibly all of their possessions, so they will take a loss that would be very grievous indeed. It likely would be more severe for them than your loss would be for you, depending on their financial situation. Mostly likely they would have to leave San Francisco.

          • Posted by truethevote

            I am happy to pay taxes. I am not happy to get penalized on top of what is required of me. In demanding 80k she is trying to participate in any gain, but she failed to chip in on the, gulp, 35% I had to put down at the time. Why do you think she will be so adversely affected? You are not reading nor processing the facts:
            1) She makes 6 figures
            2) She has elected to cut down from 2 roommates to 1 (in year three of her tenancy) – this is not action taken by someone concerned about their finances
            3) She could have socked away money for 12 years to help absorb such life throws at you – she did not
            4) If she losses all of her possessions that means the building would be close to red tagged. How is loss of interior possessions more than loss of a structure, on a material basis.
            Do you have any vacancies? You can have her as a tenant. She should be available in about 50 days…

          • Posted by BetterSF

            She does not deserve a penny. SF’s rent control and tenant protection regulations have turned her into a greedy monster.

          • Posted by Brendan

            A pleasure to hear from an enlightened human being in a crowd of Trumps.

          • Posted by San Fronzischeme

            These are the last marching orders from the Campos side? Call anyone a “Trump”? Nice world of zeroes and ones you’re living in.

    • Posted by Brendan

      You received tax deductions/benefits for ALL the payments you list, while your property value inflated. It was HER HOME. She lived in it and received no tax benefit for helping pay your mortgage. If not for rent control protection, this would be a sterile city populated by one sickening class of fools.

      • Posted by Amewsed

        When you park your car on the street with a parking meter, is it your land and space? If the land where you park increases in value, are you entitled to a share of that? Nope.

      • Posted by moto mayhem

        actually rent control foreces it to be a city of 2 classes. without it, there will be more of a mix, as middle class people could afford to rent.

        • Posted by San Fronzischeme

          Agreed. Rental amounts would be based on location and quality. Instead you have techies renting dumps on Skid Row-style areas for 4K while others “hog” a nice place in prime area for 1K.

      • Posted by SFrentier

        Don’t get me wrong Brendan, as a SF property owner I LOVE rent control! It’s the perfect storm- take a desireable city that’s mostly fully built up, give away most of the apartments to hanger ons with cheap RC, and add the leading tech industries. Whamo! The marginal rent on new apartments is through the roof, available homes, TIC’s and condos are super valuable. Savvy RE investors simply find one of a myriad of ways to deal with low rent RC tenants. And awesome supervisors like Camposino are working hard to further increase property values! That mission moratorium is a godsend for us who already own multiple properties in the mission. Calle 24 will be an extra touch- turning the mission into a Latino Disneyland a la Chinatown: good for tourism, branding and overall desirability.

  25. Posted by truethevote

    The old (pre 2013) condo conversion makes you follow the following path:
    offer tenant right to buy
    offer tenant 1 year lease (from day condo map is recorded)
    if tenant moves out before that year then owner must pay up to $1000 for moving expenses
    if tenant does not move out they can stay there under rent control
    the city lets you evict tenant only if you are selling the property.
    I hope that makes more sense.

    • Posted by Absolut

      Interesting, i didn’t know that. Doesn’t really make much sense (but then again I guess many regulations don’t). This might be a local maxima in the market anyways so maybe you will be glad to be forced to sell.

  26. Posted by truethevote

    Does anybody know when the next public hearing is on this or when it will be decided? I would like to share my story with the Board of [Supervisors].

  27. Posted by hangemhi

    what an awful thread – did all the whiners above refuse their parents allowance, or inheritance, or gift money when you bought. do you really expect a tenant not to accept a buy out. good grief

    • Posted by parklife

      Not one of the whiners, but I doubt that anyone hired an attorney and negotiated their allowance or inheritance.

      Also, it would be inappropriate to assume that all owners were part of the lucky sperm club. Some of us had to scrimp and save to buy a home. Now, I would agree that housing is VERY expensive here in the Bay Area but that is not the fault of property owners, just as accepting payments to leave a rental unit is not the fault of the tenant.

    • Posted by truethevote

      FYI – I started working when I was 13. I paid every cent of my state college tuition, I worked in the cafeteria, and started a business selling cards door to door on campus. My Dad claimed me as a dependent and then charged me rent the second I graduated. Yes I did keep the $100 I got every Christmas. Do not pretend to know me or my situation. I am very thankful my parents gave me a great work ethic and sense of independence. Something the whining tenants union could learn from…..

    • Posted by San FronziScheme

      Buy-outs are immoral. One example: you rent for 20 years. The last 10 years are at a rate less than 1/2 market rate. Say on year 20 you pay 40% of market rent. Then someone buys you out and has to pay you what amounts to the last 3 years of rent. Meaning you lived rent free these past 3 years.

      In the mean time a middle class family wants to move in. The place they need is hogged by a long timer, and the place available is double what it should be without rent control. The greed of a few affects the life of many.

  28. Posted by SFrentier

    I wonder if chiu will grow a pair and vote against this. Could help distinguish him from commie campos.

    And brah ^, you gotta let peoples express themselves. Cool it with the editing, yikes!

  29. Posted by getoverit

    Trying to understand where things are right now. I have been in discussion with a tenant (initiated by her). I fear I am going to have to tell her that the offer is off the table. This changes the deal… Should I just tell her to call Campos and thank him.
    When will this be law?

  30. Posted by truethevote

    My condo attorney said that he thinks its going to pass. I don’t think it makes it a deal breaker it just means the owners now have to involve an atty to sheppard them through this process. Unless you were 1000% sure of the tenant I think a release is prudent so either way the owner needs to pay an attorney. Just another way to jack up the cost to the owners. I do think this could hurt the tenants too because it may put some owners off from even approaching this. The city plants these landmines for owners and when the owners trip them it could mean a lawsuit.

  31. Posted by SFrentier

    ^ of course your atty hopes it will pass. Lawyers love this as it gives them more business. Our [Board of Supervisors] routinely support lawyers very well in this city, don’t they?

  32. Posted by soccermom

    There is nothing as staggering to me as the difference between how little good real estate lawyers get paid for knowing so much and how much good real estate agents get paid for knowing so little.

  33. Posted by BetterSF

    Landlords should convert all the rent-controlled multi-unit buildings to TICs and condos. When there is no more rent controlled buildings, SF will become a real city and all these nonsense politicians will be the cute little history.

    • Posted by San FronziScheme

      TICs remain under rent control, if you make the unfortunate decision of putting it up for rent. Better buy furniture and airbnb your place.

  34. Posted by BetterSF

    I think all TIC agreement should disallow renting. If owner needs to move out, just sell to another owner occupant. Never rent out a TIC.

    • Posted by San FronziScheme

      Sometimes people want to have a choice. Personally I think renting out a TIC on the open market is too risky. But to everyone his own.

  35. Posted by truethevote

    Europe – a great place to emulate – crashing economy and tenants must buy and move their own appliances.

    • Posted by san FronziScheme (formerly known as lol)

      Thanks so much for adding to the discussion with 2 very relevant bits of knowledge.

      It’s funny how a small detail like appliances can affect a country’s image. It’s all about cultural differences.
      Btw. When I first arrived I was asked about my credit history. I responded: credit? I have no credits! All my places are paid off!

      • Posted by SFrentier

        “All my places are paid off”

        How unamerican of you!

  36. Posted by SFrentier

    Was this voted on yesterday? Wut happuned?

  37. Posted by SocketSite

    UPDATE: The proposed law to regulate and restrict the buyout of tenants in San Francisco has been passed by the Board of Supervisors in a vote of 7 to 4 with Supervisors Breed, Farrell, Tang and Wiener opposing.

  38. Posted by Sfarchitect

    Can the mayor veto this?

  39. Posted by Anon

    Ed Lee needs to veto this. It is a clear loser as far as when it will certainly be challenged. Do something, Ed. Shake the wishy washy glad hand backroom technocrat thing, and do something to help the city.

  40. Posted by medalist

    This does a great job of forcing units vacant by Ellis Act, which will produce the “crisis” needed for certainly more City legislation and then perhaps some State legislation against or amending the Ellis. Certain members of BoS I’m sure are well aware of this potential result.

    • Posted by San FronziScheme

      Yes, and it shows how totally insane the situation currently is. Rent control creates scarcity which creates speculation which incites backlash regulation which creates more scarcity which incites more regulation which pushes landlords to the Ellis nuclear option.

      Then the City says “We told you so, landlords are just evil, please repeal the Ellis evictions law”.

    • Posted by parklife

      medalist,

      Yes, I thought the same thing. This new legislation when coupled with the overturning of the large eviction payments, makes utilizing the Ellis Act the most favorable way to empty a building. I’m absolutely certain the inevitable increase in Ellis evictions will be used to justify another attempt to limit its usage.

      The ironic part is, this legislation is actually going to result in fewer tenants receiving any sort of buy-out windfall. Instead they will receive the statutory relocation monies which will generally be far less. You could make the argument that this legislation is actually anti-tenant.

  41. Posted by anon

    are single family houses subject to this?

  42. Posted by R Posner

    This city, again, is way off base by never considering the blight that rent control for long-time tenancy have upon small, sometimes disabled and/or senior landlords that are just trying to live the American dream, a dream that San Francisco continually trounces upon turning our beautiful city into a collection of rundown buildings and ghetto-like conditions via rent control.

    Small-time landlords owning only the building they live in simply cannot afford to keep our homes beautiful when expenses of repairs and maintenance outpace the rates at which rents are mandated through our city’s seemingly unconstitutional rent control — simple mathematical equation. This is one of the reasons landlords sell out to the mega-condo building projects popping up all throughout the Upper Market neighborhoods. The backers of rental control are so short-sighted and are a major cause of this crazy Blob of Condos — and — are the first to complain. They are complaining of a result of their own doing. Wake Up!

  43. Posted by Hitman

    Socketsite: Update on the challenge last week? I already wrote that I think it is an unconstitutional content based regulation of speech.

  44. Posted by H

    Does anyone have information on how buyouts should be split among several roommates? Are there ordinances governing that? I’ve heard of Master Tenants keeping everything or splitting it according to how long each roommate has lived there. Should it be split evenly?

  45. Posted by BayviewSF

    I think that the supervisors are committing a crime by knowingly passing regulations that they know will be struck down in the court. It is a total waste of taxpayer money, a total waste of the judge’s time and our precious judicial resource, a waste of city lawmaker’s time. By knowingly wasting public resource to make a fame for themselves and to gain votes from certain population, it is a crime.

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