The city ordinance, passed in January 2019, prohibited property owners from increasing rents in amounts so large that they were clearly not intended to recoup the owner’s costs but were instead meant to displace the tenant, either voluntarily or by a suit for nonpayment of rent. In deciding whether the rent was being raised in bad faith, city officials were to consider whether the amounts were substantially above market rates and whether the increase was imposed within six months of an attempt to evict the tenant.
A lawsuit filed a month later by the San Francisco Apartment Association and other groups claimed San Francisco was effectively controlling rents, in violation of Costa-Hawkins. Superior Court Judge Charles Haines disagreed in 2020, and his ruling was upheld Monday by the First District Court of Appeal in San Francisco.
“Costa-Hawkins does not protect a landlord’s right to use a pretextual rent increase to avoid lawfully imposed local eviction restrictions,” Justice Stuart Pollak said in the 3-0 ruling. He said the purpose of the ordinance was not to restrict lawful rent increases, but “to deter landlords from trying to attempt to avoid local eviction rules by imposing artificially high rents in bad faith.”
City Attorney David Chiu praised the ruling. “When a tenant’s rent is doubled or tripled, that is just an eviction by another name,” he said in a statement. “We cannot allow unscrupulous landlords to circumvent our local laws and unlawfully evict tenants.”
The decision was also welcomed by the sponsor of the 2019 ordinance, Supervisor Hillary Ronen. “Jacking up the rent to force a tenant to move is clearly harassment, and we are not about to tolerate that in San Francisco,” she said.
The owners’ organizations saw it differently.
The San Francisco ordinance “undermines Costa-Hawkins and puts landlords at the mercy of local regulation with respect to the setting of rents in an area where the Legislature expressly intended to preclude local regulation, said Christopher Skinnell, lawyer for the San Francisco Apartment Association, which could seek review in the state Supreme Court.
The local law is “over-protective,” said Curtis Dowling, attorney for the California Apartment Association. Doubling or tripling a tenant’s rent to secure an eviction would go too far, he said, but under the wording of the San Francisco law, “any increase on these units can get dragged into a litigation dragnet.”
Bob Egelko is a San Francisco Chronicle staff writer. Email: email@example.com Twitter: @BobEgelko