Election Section

Rent Control Decision on Ellis Act Challenged: By PETER MUTNICK

Tuesday October 19, 2004

At its Oct. 12, 2004 meeting, the City Council passed the first reading of a recommendation from the Rent Board for an amendment to the Ellis Implementation Ordinance. The three reasons given for the increase of the fixed relocation payment from $4,500 to $7,000 were: 1) what Berkeley has done in the past, 2) what other rent-controlled communities have done, and 3) analogy to the state and federal eminent domain laws, which are designed to protect the constitutional rights of tenants and others.  

The first two of these reasons are horizontal, while the third is vertical. Just because Berkeley has done it in the past or other communities have done it, doesn’t mean it is legal or constitutional. As for the third reason, the information provided by the Rent Board was essentially false.  

The first false statement was the following: “Thus both the state and federal government currently provide relocation assistance to displaced tenants that is significantly greater than the assistance provided under BMC Section 13.77.055.” 

In fact, neither state nor federal government doles out a fixed amount regardless of entitlement. The payment amount is determined strictly according to the actual value of the leasehold, which is the difference between the rent that the tenant will have to pay (after vacancy decontrol) and the rent that the tenant had been paying (under rent control), with one exception: if the tenant is currently paying more than 30 percent of his or her income in rent, then the payment to the tenant is increased by the difference. This procedure is established unambiguously in 49 CFR 24.402.(b), which is cited, but not adhered to, by the Rent Board.  

The second false statement was the following: “Currently, federal relocation guidelines provide relocation assistance up to a maximum of $5,250 to compensate for the rent increase a displaced tenant is likely to incur.” 

In fact, both state and federal programs are open-ended, as they must be to comply with constitutional requirements. If comparable housing at a comparable rent is not available for any reason, then the evicting agency must provide comparable housing at any cost or forfeit the right of eminent domain. These open-ended programs are established by 42 U.S.C. 4626 and Government Code §7264.5. 

Therefore, the right thing to do is to require the compensation of the tenant for the loss of his leasehold right, to the full extent of its value for 42 or 48 months, as it is done in the eminent domain law. The leasehold right is a very well-established and undeniable constitutional right. On the other hand, there is simply no legal or constitutional ground for giving all tenants who have to move a fixed relocation payment, apart from moving expenses, simply because it is “inconvenient” to have to move. 

The legally valid alternative measure would actually be better for tenants. It would eliminate the most pernicious aspect of the Ellis Act, namely that it can be used to circumvent rent control by threatening eviction and then buying out tenants on the cheap. The motivation for this is to eliminate tenants under original rent control, but their valuable leasehold rights would be protected by the alternative measure. 

Landlords could not retaliate against tenants under original rent control, because they are already in their apartments, but landlords could and would retaliate against the low-income, elderly, and disabled persons, who alone would receive the fixed payment, by refusing to rent to them. Those persons certainly deserve all the money they can get, but it is unconstitutional to turn landlords into welfare agencies—that is the responsibility of society collectively.