SAN FRANCISCO (CBS SF) -- A federal judge in San Francisco declined Friday to issue an immediate order blocking a new city law that sharply increases the relocation payments landlords must give tenants evicted under the state's Ellis Act.
But U.S. District Judge Charles Breyer scheduled an expedited trial to begin on Oct. 6 on a challenge to the law by several landlords and associations.
"There's an urgency to decide this, for both the people who own property and for tenants," Breyer said during a hearing in his Federal Building courtroom.
Breyer said he was turning down a request by the landlords for an immediate temporary restraining order, however, because they had not shown they would suffer irreparable harm without such an order.
The Oct. 6 trial date is geared toward an Oct. 24 deadline for remaining evicted tenants to leave a 33-unit Nob Hill apartment building owned by Park Lane Associates, which is selling the units as tenancy-in-common properties.
Breyer said he hopes to issue a decision on the constitutionality of the city law before that deadline.
The law, which went into effect June 1, requires landlords to give tenants in Ellis Act evictions a relocation assistance payment equal to two years' worth of the difference between the tenant's current rent and the cost of comparable housing in the city.
California's 1985 Ellis Act allows landlords to remove properties from the rental market and evict tenants who occupied them. It also allows cities to enact measures to alleviate the impact on tenants.
The landlords who sued the city last month claim the new law amounts to an unconstitutional taking of private property without compensation.
"This ordinance isn't rent control, it's property control," David Breemer, a Pacific Legal Foundation attorney representing the plaintiffs, told Breyer.
"It's 'give us your money' or 'give us your property,'" he contended.
The plaintiffs in the case include Park Lane Associates and Daniel and Maria Levin, who own a two-unit building on Lombard Street and want to take over the downstairs unit for their own use.
The Levins say the new law would require them to pay nearly $118,000 in relocation aid to the downstairs tenant, compared with $8,685 under the previous 2005 version of the city law.
Park Lane Associates says it would have to pay present and former tenants nearly $1.5 million, compared with $264,000 under the old law.
The other plaintiffs are two property owner groups, the San Francisco Apartment Association and the Coalition for Better Housing.
The city contends the law is similar to rent control, which has been found constitutional. City lawyers wrote in a filing last week that "protecting displaced tenants with relocation payments to help them adjust to a fierce real estate market is a worthy public policy."
Deputy City Attorney Christine Van Aken told Breyer during the hearing, "When you become a landlord, this is an intensely regulated business. This is all of a piece of that."
The upcoming nonjury trial will address the plaintiffs' claim that the law is unconstitutional "on its face," meaning the ordinance would always violate the Constitution when implemented.
Breyer said that if he finds the law unconstitutional in the October trial, he will issue a preliminary injunction blocking it.
If he does not conclude the law is unconstitutional on its face, he will then hold a second phase of trial at a later date to consider whether it is unconstitutional as applied to the particular plaintiffs.
The judge said he is likely to allow tenants to join the case if they wish to do so.
Attorney Joseph Alioto said during the hearing that he represents a number of Park Lane tenants who do want to become parties in the dispute.
He told Breyer that evicted tenants have not been given the enhanced relocation payments and that there are several ongoing cases in San Francisco Superior Court concerning alleged wrongful evictions and substandard conditions in the building.
"No one left voluntarily. There is a real panic going on there," Alioto said.
Breyer will hold a hearing on Wednesday on any requests filed by tenants to join the case.
In a statement issued after the hearing, Breemer said, "By setting an expedited date for the trial on our challenge to the city's confiscatory law, Judge Breyer recognized that important legal questions are at stake.
"Indeed, the stakes couldn't be higher for fundamental property rights," the attorney said.
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