Housing cars or people?

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GREEN CITY San Francisco Board of Supervisors President David Chiu has introduced legislation that would curtail the ability of residential property owners in Telegraph Hill, North Beach, and Chinatown to evict tenants and replace them with garages.

The ordinance, which is currently being reviewed by staff before it is considered by the Planning Commission, seeks to prohibit the construction of garages in rental properties that have been the site of a no-fault eviction in the past decade. Even if no evictions have occurred, owners would have to apply for a conditional use permit from the Planning Department to build the garage.

"We have seen a pattern of applications for garage installations following no-fault evictions," Chiu aide David Noyola explained.

The Ellis Act, a state law passed in 1986, gives owners the right to evict tenants if they decide to "withdraw from the rental market." The law specifies that all units in the building must be evicted. In 2005, the Board of Supervisors also began requiring landlords to pay $4,500 to each evicted tenant for relocation costs, with an additional $3,000 for seniors and the disabled.

Ted Gullicksen, director of the San Francisco Tenant Union, said the Ellis Act was intended to allow property owners to get out of the business of being a landlord, but "in practice it is utilized far more often by developers who are looking to rent the properties at considerable profit."

Although there are restrictions on re-renting property that has been cleared of tenants under the Ellis Act, a primary concern of tenant activists is the use of evictions to convert the building into a tenancy-in-common. A TIC is a form of joint ownership whereby multiple owners can buy the building and live in separate units.

"Often the real estate developer will try to make improvements following a TIC conversion to make it more sellable, and one of those is garages," Gullicksen said.

Malcolm Yeung, the public policy manager of the Chinatown Community Development Center, told us that "a garage generally increases the market value of a property by $30,000 to $50,000."

Yeung worked with Chiu’s office to develop the legislation after arguing in a discretionary review hearing before the Planning Commission that a particular Ellis Act eviction in the Telegraph Hill neighborhood was in violation of Sec. 101.1(b) of the San Francisco Planning Code, which states "that existing housing and neighborhood character be conserved and protected in order to preserve the cultural and economic diversity of our neighborhoods."

Following the distribution of Ellis Act notices to four low-income families, the property owner also filed for a garage add-on. Yeung successfully made the case that the eviction contradicted the Planning Code’s commitment to the preservation of economic diversity. He told us that the addition of garages "incentivizes owners to take on the financial costs of an Ellis Act eviction" and can "transform communities from long-term low-income residents to TICs, which go on the market at high value."

Gullicksen also said landlords often threaten an Ellis Act eviction and offer a buyout. "One of the benefits of the legislation is that it put tenants more in the driver’s seat when negotiating a buyout," he said. He also noted that homeowners are twice as likely to own cars as renters, which means that the conversions to TICs increase the number of vehicles in neighborhoods already congested with automobiles.

But like with all housing activity, there have been a greatly reduced number of both Ellis Act evictions and buyouts since the crash of the housing and credit markets a year ago, slowing to zero from March through May before slowly picking up in July.

Critics have decried the legislation as creating the burden of obtaining a conditional use permit and exacerbating the lack of street parking in the neighborhoods. But Noyola told us, "This problem has been around for a long time and will continue to be an issue when the market picks up again."

The legislation would also decrease the number of parking spaces that may be built with each new housing unit, part of a citywide trend. Noyola said the legislation is "progressive planning policy that prioritizes housing over parking, especially in the densest part of the city."