State Laws in Senior Eviction Deaths: Interview with Dean Preston
If someone wants to write a good tragedy they shouldn’t start by picking up characters, Aristotle teaches. A tragedy portrays dramatic actions that make people happy or unhappy. The composition of events, the plot is the decisive part in a tragedy, and it involves those characters which it needs, and they play a secondary role.
Some people getting into a vortex that the composition of events creates are simply not strong enough to resist. I doubt that Peter Owens who evicted Iris Canada dreamt to add Iris’s death to his biography. Nevertheless, it will remain in it forever. He also lost his position of director of Burlington's Community and Economic Development Office. He didn’t seem ready to resist a looming profit of – a ballpark figure – $800,000 which was at stake in the Iris Canada’s eviction story. And swallowing the bait he unlikely could break away from the powerful and destructive scenario.
This plot is enabled by laws – like the Ellis Act and Costa Hawkins – which allow to make an unlimited profit on human fractured fates. It is also maintained by lawyers who are not only encourage landlords to get into the venture but prevent any attempts to change or loosen the scenario, in this article we give examples of such their actions.
So here we’ll try to understand the composition of events that leads to deaths of many senior tenants in the San Francisco/Bay Area, picks up right actors, and prevents all forces in civil society from resolving the outrageous situation. We’re also talking about the ways to reverse it.
Our first talk – with Dean Preston, Executive Director of Tenants Together, California statewide organization for renter’s rights.
Power behind the throne: Real estate industry
D.B.: I would like to discuss the problem of senior eviction deaths in a broader picture of housing crisis. I am curious how we arrived at a point when people readily step over dead bodies – for profit. I suppose it’s not a regular situation. I shared it with people from other countries – European, Australia, Canada. They believe in their societies such situations could never happen. So, what is going on here?
Dean P.: The fundamental problem we have in this country that the policy makers and the state view housing as a commodity rather than a human right. And if you view housing as a commodity, then it’s something that focuses on buying and selling it, making money off of it, and people in that housing are just a casualty in transactions. That’s reflected in the tax code, it’s reflected in the way how people talk about housing, and it’s reflected in a lack of rights for the tenants. It would be easily solvable if there were political will.
D.B. Why is it that California fails to gain more protection for tenants? I though renters were a majority, and they vote.
Dean P.: In terms of population, there are 45 percent tenants in the state. Nationally it’s approximately a third. In San Francisco, we have more tenants – up to 62%. But in the state it’s different. Tenants are not a majority at the state or national level, and they are also not a majority of voters.
For the last decade, if you look at the money that the California Association of Realtors and California Apartment Association gave to state candidates, it’s going through the roof.
It’s interesting that nationally nobody pays attention to real estate money. People complain about influence of big corporations, it’s in news all the time. But nobody talks about influence of real estate industry. It’s not only in California. What is interesting, in California and San Francisco we have elected officials that consider themselves more liberal, more democratic, more progressive. Even if the state has more democrats, more who opposed the policy of Trump, they are less friendly to tenants.
The Ellis Act and Costa Hawkins. The Ellis Act was not designed for mass evictions.
D.B.: In attempts to stabilize the rental market and protect tenants, especially such vulnerable ones as seniors, we face two big problems. Costa Hawkins and Ellis Act. Which one is worse?
I think, they’re the same problem. It’s the state preempting, preventing the cities from setting real protections. The Ellis Act has more intense impact in certain cities – San Francisco, Los Angeles, Santa Monica. And it has disproportional impact on seniors. Costa Hawkins has more broader impact.
D.B.: Thinking about the cases I described in the opening article, I got such a perception that the Ellis Act is a law that is easy to manipulate, and it’s an instrument to abuse the law. I am not a lawyer, but for me the Ellis Act looks more like an opportunity for speculators to avoid legal regulation in housing sphere.
Dean P.: I think you’re right, David. The Ellis Act, as it was introduced, was supposed very rarely used. The state legislators thought so when they passed it. But what happened – real estate speculators found a way how to use it to do mass evictions.
When Costa Hawkins was introduced, everyone knew very clearly that it was going severely limit rent control around the state, and it was a purpose of it. There was opposition to both of them, and tenants’ rights community opposed them both.
Context note: According to data analyzed and introduced in the report (http://antievictionmappingproject.net/EllisActReport.pdf) by Tenants Together and The Anti-Eviction Mapping project in 2014:
51% of the Ellis Act evictions were commenced by owners within the first year of their ownership of the property.
78% of the Ellis Act evictions are commenced by owners within five years of ownership.
30% of units were Elised by known “serial evictors.” Many of these investors have entered, exited, re-entered and re-exited the rental business, evicting tenants from multiple buildings.
71% of the Ellis Act evictions impacted senior/disabled tenants.
In the report, you can find more data and historical context of the Ellis Act adoption and turning it into instrument for mass evictions.
Dean P.: The use of the Ellis act, and the willingness of the courts to allow that broader use, wasn’t fully anticipated at the time when it passed.
The Courts role in the housing drama. TIC – affordable opportunity or a loophole in regulation?
D.B. So it depends on the courts?
Dean P.: Yes. The courts have enabled this misuse of the Ellis Act. The city has tried to limit the Ellis Act in a number ways. Not just San Francisco, other cities as well. In some cases, the courts have thrown out this protection. For example, the city of San Francisco in 2001 passed legislation that said that TICs (tenancies in common) should be subject to the same rules as condominiums. The city limits how many condominiums you can convert in San Francisco in a year. There is no limitation for TICs. So, in 2001 the city passed a law to force TICs, which are basically like condominiums, to comply with the same rules and be subject to the same limit – up to 200 per year. That would stop thousands of evictions. That passed by the Board of Supervisors and the court threw it out. The court said that the city doesn’t have a right to regulate the number of tenancies in common amount and force them to file as condos.
D.B.: Condominiums are regulated by The San Francisco Subdivision Code. But not TICs. What was the argument?
Dean P.: TIC is a fiction. It’s what the real estate industry made up to basically create condominiums without creating condominiums. From the cities’ regulation perspective, from the tax collector’s perspective, a four-unit TIC building is still an apartment building; the city taxes one building, not each unit. There is no subdivision, no condominium conversion.
B.D. While in fact people own each his or her unit. But it means that the form of property changes?
Dean P.: No, because the TIC is an agreement between the people who own different units. One gets unit # 1, this person gets unit # 2, and it’s not recorded. The person who lives in unit 1 does not literally own unit 1. They own 25% of the building. They can sell it, but what they sell is the percentage with the right to use part of the building. It’s designed just to get around the condo rules. And the city said: “Come on! This is a condo! You should file the same forms, you should offer the same rights for tenants, and you should offer the life-time lease for seniors, all this protection that’s a part of a condo law.”
The court said – no, people have a constitutional right to own property and decide how they want to divide and use it. And the city doesn’t have a right to force them to own their unit as supposed to under the condo rules.
Context note: The lost battle for regulation over tenancies in common.
Back in 2001, the San Francisco Board of Supervisors passed ordinance 0161-01. The ordinance amended the San Francisco Subdivision Code equating tenancies-in-common to condominium ownership, and adjusted them in accordance to conversion rules. “Tenancies-in-common, – the document said, – … are similar to condominiums and community apartments and have the same impact on population and housing stock.”
The city found that TICs were “not in the best interest of the public health, safety and welfare,” since they escaped the city regulation that condominiums were subjected to. At least in two important points: limitation of number of units that can be converted annually, and “tenant intent to purchase.” (sec. 1388). According to the latter, “no conversion shall be approved unless there are substantial numbers of tenants who have indicated their intent to purchase their rental unit.” In the process of condominium conversion there is a rule of first refusal that orders an owner to propose occupants of the building a right to buy it. Thus tenants have more options than being just evicted under the Ellis Act, as it happens in case of TIC conversion.
The option of buying their units would balance, to certain extend, the interests of long-term tenants who want to stay in their homes and property owners who want to take the building off from rental market. Especially if the city had programs to subsidize mortgages for middle and low-income families.
The Board of Supervisors voted for the ordinance, overriding former Mayor Willie Brown’s veto. The ordinance was passed on June 11 of 2001, and a suit to overturn it was filed August 8 in San Francisco Superior Court. Would you be surprised to meet at the stage the same actors who appear later in the drama with Iris Canada’s eviction? Judge A. James Robertson II, and Andrew Zacks (a lawyer who helped Peter Owens to evict Ms. Canada) with associates represented the plaintiffs.
Plaintiffs claimed that the ordinance 0161-01 violated the California constitutional right to privacy, and the California and federal constitutional right to equal protection of the laws. The way how people want to organize their property rights is a part of privacy rights, they stated.
The City and County of San Francisco, the City and County of San Francisco Board of Supervisors, who were defendants, and the San Francisco Tenants Union that entered the case as an intervenor, claimed that the city had general police power authority to regulate tenancies in common demanding to record exclusive rights of occupancy which are in the TIC agreement. In the agreement members of TIC put the exclusive rights of occupancy of a certain unit, but for the City there are not unit owners. So the City stated that what is in agreement, should be in a record. And then, in fact, it is the same as condominiums and should be regulated accordingly.
The case # 323591 went through several stages, on each of them Judge A. James Roberson II granted the petition of plaintiffs.
At the moment, TIC conversion remain popular in San Francisco. A few banks began offering “fractional mortgages” to make it easier to buy TICs, but most banks no longer make those loans.
So property owners found a way to flip buildings and make additional profit: many of them loan money to TIC members with interest. The scheme was used by Peter Owens who loaned money to Iris Canada’s new neighbors.
Dean P.: My point is: if the court ruled differently, TICs and the Ellis Act wouldn’t decimated so many tenants, particularly seniors. That’s an example: if people knew while passing the Ellis Act how courts would rule about that, it would have less chances to be adopted.
D.B.: In the majority of cases TIC is a step for a condo conversion. And the price changes when the property converted into condo. For me it seems like selling air – you don’t improve the property, you just make money on changing the status of property. Is any good reason for having different forms of property like TIC and condo? Why do we have this two-steps scheme for condo conversion?
Dean P.: Because it benefits real estate speculators, to get rid of rent controlled tenants, and change the property to make more money. In San Francisco speculators buy unit and evict rent controlled tenants under the Ellis Act, and they actually don’t have other way. Some tried to do it unit by unit, they harassed people. That’s how this business works: they harass people to get them to move out. If court said “no” to TIC conversion as it exists now, the speculators wouldn’t use the Ellis Act in the way they use it. It’s a big game, and the industry found how to make money on TIC and condo conversions, and when the city tried to stop it, the courts cut them away.
D.B.: You may hear such arguments – from lawyers who do condo conversion and TICs – e.g., Andy Sirkin would say that TIC is a good thing because it’s an affordable opportunity for people to buy property. What would you answer?
Dean P.: What doesn’t bother those lawyers is that they create one type of housing by destroying someone else’s housing. And those lawyers simply don’t care that you’re taken someone’s home and that’s how you’re creating this housing opportunity. In reality, the reason why sometimes it’s cheaper is because a speculator has purchased something that was never intended to be condominiums or TICs. They buy buildings cheaper because they’re occupied by tenants with rent control. They target buildings with long-term tenants, and that’s why seniors are disproportionately evicted. Speculators are looking specifically for such buildings, and they are looking at what the rental income in this property, because it used to be how people measure the value of the building. That’s what influences how much the property has sold for. Speculators don’t think about the rent, they don’t care about the rent, they buy a building for $2 million, then spend half a million to renovate, and then to sell six units for 1,000,000 each.
The really sick part of what Sirkin and Zacks are doing is the speculators. The opportunities they’re using – they can target buildings with low-income people because it’s cheaper.
Tenants right to purchase unit
D.B. What if every tenant had an opportunity to buy their unit at its current price? That’s in the Subdivision Code for condo conversion process. I still don’t understand why they didn’t allow Iris to do this – in the Code it’s clear that every occupant has this right. So I don’t understand why the judge decided that this rule didn’t apply to her. But, anyway, in general it means that every occupant has this right. If it were extended to any situation when the building is taken off from rental market, would it stop speculators and thus displacement of long-term tenants and families who live in San Francisco? First of all, as I saw, even if you buy condo, the mortgage is lower than the market rate rent. Second, I saw there is a program for San Francisco residents to buy units with zero down payment. Third, the city could have a program to help middle and low income SF residents to buy their first property, especially in cases when they facing eviction from a long-term residence. I believe, it would stabilize situation for many families who live in San Francisco and shouldn’t be afraid of displacement, what do you think?
Dean P.: Tenants right to purchase is a certainly important policy option. But as you said it occurs in the condo-conversion law, and part of using TICs is to get around that. So, we’d have to do a specific law to require it for TIC conversion. And the landlords would challenge it in the court, and it’s not clear what the court would say. The city would have to explain its basis for requiring for tenants the offer the right of first refusal. I think we could do the right of first refusal at the time when the building is going to be sold. I think it would be harder to require it on a unit-by-unit basis, because the court has said that the TICs are different than condos. So, if a landlord is saying that he is ready to sell the building the city could have the law that would require that landlord to offer it to the tenants.
In Washington DC, they have TOPA – Tenants Opportunity to Purchase Act.
Note: The Tenant Opportunity to Purchase Act was enacted in Washington DC in 1980 in order to keep longtime renters from being forced out of their homes in gentrifying neighborhoods. Under TOPA, the landlord must inform the tenant about his intent to sell the building and offer the tenant the right to buy it. The letter with the offer must include the listing price and all information about the property. The price has to be fair. If the tenant declines to buy, and the owner subsequently sells the property to another buyer for more than 10 percent below the price proposed to the tenant, the owner is required to come back to the tenant with a new offer.
News media reports have shown some problems with TOPA. Some tenants speculate on their rights for first refusal by selling that right to potential buyers. But, considering the experience of use and misuse of TOPA in Washington DC, the City of San Francisco could pass legislation that anticipates and diminishes unintended consequences.
D.B.: Do you think if we pass a similar law in San Francisco, considering pluses and minuses of TOPA, it would prevent speculation?
Dean P.: It would, but one of the main concerns that was raised ten years ago about the right to purchase is that a lot of people would be unable to purchase, and people can be defrauded basically.
D.B.: Well, we could establish some programs in the city that would help people, especially low-income, to purchase their homes. Just to help San Francisco residents to stay in the city and own their units where they have being living for many years or the entire lives.
Dean P.: But reality is that owners and real estate speculators don’t want that. How do you force them to do that?
D.B.: I think, this is not landlords’ right to decide who they want to sell the property to. The longtime residents should definitely have a priority right to do that.
Dean P.: The owner has right under the Ellis Act to evict everyone to get out of the rental business. But yes, absolutely, nobody should be displaced so that speculators can make more money. People should have options as renters, or purchase if it’s reasonable for them. The problem is how to actualize this policy. You should make sure that you do it in a way that does not preempt be the state law, otherwise the court would rule against it.
Repeal Costa Hawkins
D.B.: Do we have any to repeal Costa Hawkins?
Dean P.: There is a bill to do it, AB 1506, that has to move through the Assembly Housing Committee in January. And even if it’s passed in the Assembly it will be a hard road to convince members of the state Senate. We are not giving up on our campaign to pass it this year, but we also know that it can take multiple years. The real estate industry owns a lot of politicians.
Part of the challenge is forcing legislators to take a position. Labor unions, for example, have been asking every candidate whether they support repealing the Ellis Act and Costa Hawkins, because until now they haven’t taken a position. I would say in terms of repealing the Ellis Act or repealing Costa-Hawkins it’s going to be a multiyear fight in Sacramento. Most people in the state don’t know what Costa Hawkins or the Ellis Act are. In San Francisco or in LA people know, but big parts of the state don’t.
D.B.: In California at the moment there are no cities with vacancy control?
Vacancy control means that rent control applies even after a unit becomes vacant. In San Francisco the landlord can raise the rent by whatever they want after the tenant moves out.
Dean P.: The Costa Hawkins Act doesn’t allow cities to pass vacancy control. Some cities like Santa Monica, East Palo Alto, Berkeley used to have it, but then Costa Hawkins eliminated it. And some cities want to but under current law they can’t pass vacancy control. There are more and more cities that have been passing rent control, but they don’t have vacancy control. And rent control doesn’t cover single family homes, condominiums, or new construction.
D.B.: If we had vacancy control all the speculation around housing would fail, right? Because if the rent can be increased only by certain per cent, nobody would be interested in evicting elders and other long-term tenants. Like in Iris’s case – nobody would resort to such a long, terrible and costly process of persecuting her.
Dean P.: If we had vacancy control we wouldn’t see nearly as many harassment evictions. Because the landlords harass tenants so they gen get them to move out and raise the rent for new tenants. In Iris’s case, it’s less about Costa Hawkins, it’s about the Ellis Act. Even repealing Costa Hawkins we don’t solve the Ellis Act problem.
Is harassment punishable?
D.B.: What about harassment? Everybody knows how much harassment is involved into eviction process, basically every Ellis Act eviction. But no landlords have been charged for this.
Dean P.: It happens in the most extreme cases.
D.B.: This is only one case, Kihagis, and she was not criminally charged. Among her tenants there was Martha Bini who died while Kihagi was harassing tenants, and the fact has been proven in the court.
Dean P.: The district attorney could charge a lot of these violations as criminal cases.
D.B.: But why it hasn’t been done and what we can do to compel the DA to file charges in the cases of elder abuse during eviction which were submitted by housing rights advocates?
Dean P.: Proof. And political aspirations. They want to view these things as civil matters, they don’t view mistreatment of tenants, though they should, as a criminal matter in many cases.
I think that criminal prosecution tends to have a big impact on landlords and any others in the industry. Because when they sued in civil court it’s just the cost of doing business.
D.B.: In Kihagis case the harassment was proved. What would happen if we took this case and go to the DA office?
Dean P.: It does not always transfer, civil case into criminal case, the burden of proof in criminal case is higher.
D.B.: How we can protect seniors?
Dean P.: By taking the egregious case of a senior where was clearly illegal and intended conduct, pushing the DA, and force him to file cases.
The second thing is looking for what the city can do particularly in the Ellis Act evictions, to prevent them.
And, as you said, the purchase opportunity for tenants like TOPA.
In the next part we will talk about repealing Costa Hawkins with Deepa Varma and other housing right advocates, explore rent control in the context of housing market economics, and follow up with Andy Sirkin on regulation of TICs.