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California First District Court of Appeal Finds San Francisco Ordinance Restricting Landlord’s Exit from Rental Market Preempted by State Law

The Court of Appeal for the First District held that a state law known as the Ellis Act of 1985 preempts an ordinance adopted by the City and County of San Francisco because it restricts a landowner’s ability to exit the rental market.

[San Francisco Apartment Association v. City and County of San Francisco, ___Cal.App.5th___, Case No. A144702 (1st Dist. Sept. 19, 2016).]

The City and County of San Francisco (San Francisco) enacted § 317(e)(4) as part of the San Francisco Planning Code, governing residential merger or the combining of two or more legal residential units, resulting in a decrease in the number of units within a building.

The court addressed whether § 317(e)(4) is preempted by the Ellis Act. The Ellis Act specifically provides that it is not intended to diminish or enhance any public agency’s power to grant or deny entitlements to use real property, including planning, zoning, and subdivision map approvals. San Francisco argued that the new code is within their police power to adopt land use regulations and, therefore, not preempted by the Ellis Act. The court disagreed, holding that the San Francisco code enters into an area fully occupied by the Ellis Act and, specifically, the ability of landowners to exit the rental market by noticing evictions under the Ellis Act.

The case considers preemption in the context of a narrow set of state and local laws, but it highlights the interplay between state law and local police power, and is an example of the caution local agencies must use when adopting ordinances that cross into areas governed by state law. The court’s decision is accessible online at:

(Kristen Castaños)