Amendment to Ellis Act Bad Idea

By Rosario Perry

The Ellis Act was passed in 1986 to modify the injustices of rent control and to counteract the great injustice the Rose Bird Supreme Court decision in Nash v. Santa Monica inflicted upon property owners. (Rose Bird was subsequently voted out of office).

The Nash decision created great anger in the legislature when it was decided. Its holding -- that property owners can be forced to work for tenants at ridiculously low rents and under harsh treatment from the local cities and tenants -- was strongly hated. The legislature responded with Ellis. It is ironic that the proponents of this bill are referencing it at all.

Ever since rent control was first passed in Santa Monica in 1979, the law did not require a means test. In other words rent control protects the rich tenant (doctor, lawyer, and broker) just as well as it allegedly protects the poor tenant.

Why rent control for rich tenants? Clearly the local governments want to protect their voter base, and they find it in wealthy tenants. However, this only makes it worse for the poor tenant, who cannot find existing housing.

The States rental housing market in rent controlled cities is a mess. Why is it that non rent controlled cities are doing fine, and only the rent controlled cities like Santa Monica, San Francisco and Los Angeles are always complaining about housing shortages?

The first reason is that these cities have seriously down-zoned their residential zones and actively discourage new construction. Santa Monica has just finished a series of down zonings where the density for any sized lot (even an acre or more) is four units. With this attack on new housing, is it any wonder that there is a shortage in those towns?

Ellis allows the free market to work. It allows demolition of older buildings which have lost their functionality and their replacement with new housing. All new housing helps the rental market.

It also allows families who own smaller buildings, to assist the owner to allow family members to move in and live with them. All local governments restrict family and owner occupancy evictions to one person only. Thus an owner living in a building cannot evict a tenant to move a family member in with them, and if a family member already lives in the building, the owner cannot evict a tenant to move in herself/himself.

Ellis was seen as a safety value to oppressive city rent control laws, which over-restricted the owners’ property rights. At that time, the most egregious issue of rent control was that city-mandated controls protected the wealthy tenants at the expense of the poorer housing providers.

Since 1986 nothing has been done by any of the local entities to rectify this injustice. Today, as it was when rent control laws first passed, the wealthy tenant gets protection at the loss to poor tenants and housing providers.

State Senator Sheila Kuehl's law does not deal with the poor owner who wishes to leave the rental market, the small unit owners who wish to use their rental building as housing for their families, the harassed property owner who wants to keep their property, but is sick and fed up with local controls and harassment.

With this change in the law, the small property owner will have no redress, no protection against the local governments' harsh treatment, nor against the tenant's oppressions either. They will be forced to sell and worse at low prices.

Rosario Perry is a Santa Monica landlord attorney who has handled numerous Ellis cases.