San Francisco Chronicle - October 28, 2004
State court rules for residential hotel owners
Bob Egelko, Chronicle Staff Writer

Owners of residential hotels in San Francisco have a right to convert them to nonrental housing or demolish them, despite a city ordinance that requires replacement of the lost housing, a state appeals court says.

The law, backed by tenant rights activists, requires property owners to provide new housing or pay a fee to the city when taking residential hotel rooms off the market. But a Court of Appeal panel ruled Tuesday that the ordinance could not be enforced against an owner who wanted to go out of the rental business, a right established by a state law called the Ellis Act.

An appeals court issued a similar ruling in 1990, but San Francisco officials argued that amendments made to the Ellis Act in 2000 had revived the city ordinance. Those amendments said an owner's right to stop renting to tenants did not override a locality's authority to enforce laws governing "the demolition and redevelopment of residential property.''

But in Tuesday's ruling, which upheld a Superior Court decision, the three-judge panel said the amendments did not change "the expressly stated, fundamental purpose of the Ellis Act: to allow owners of residential rental property to go out of the rental business without restriction by the local government.''

The ruling came in a suit by owners of three residential hotels and probably will affect six to 10 properties in the city, said Andrew Zacks, lawyer for a trust that formerly owned the three buildings. The three are the two-building Marine View mansion at 2820 and 2824 Scott St. and a building at 2201 Baker St.

The trustee filed notices two years ago to evict tenants from the 40 residential units and convert the buildings to single-family housing. Two tenants have fought eviction and still live in one of the buildings, Zacks said.

"These efforts to compel people to remain landlords have all failed, and we think they'll continue to fail,'' Zacks said.

Deputy City Attorney Andrew Schwartz said the court had made the 2000 amendments to the Ellis Act meaningless. This week's decision "means there will be a loss of affordable housing,'' he said.

The city hasn't decided whether to appeal to the state Supreme Court.