“It was a happy time,” Shashou, 77, recalled on a recent Sunday afternoon. “I was hoping to die here.”
That was before Shashou received an eviction notice in March. Shashou’s $825-a-month rent-controlled apartment, and 17 other units, will be demolished to make way for a pricey new apartment complex.
Such evictions have surged in Los Angeles as property owners cash in on the recovery. Rent-controlled units are being converted or simply flattened. In their place, developers are putting up new condominium or apartment buildings, modern mansions or clusters of compact, single-family homes.
The evictions — allowed by the state’s Ellis Act — have exploded in San Francisco as well, accelerating a backlash against the city’s tech-driven gentrification. Two legislators there have moved to limit the practice; under current law, property owners are allowed to evict if they get out of the rental business or demolish their buildings.
In Los Angeles, owners filed to remove 378 rent-controlled units from the market last year, 40% more than in 2012, according to data from the Los Angeles Housing and Community Investment Department. That pace has accelerated this year.
“The people who make Los Angeles run — such as the hotel workers, the service workers, the teachers and the bus drivers and the regular working people — are being run out of Los Angeles,” said Larry Gross, executive director of the Coalition for Economic Survival.
Los Angeles passed rent control in 1979, after concerns that rapid rent increases were pricing many out of the city. There are roughly 638,000 such units left in Los Angeles — a dwindling supply because controls generally apply only to older buildings. And there’s little political momentum to expand rent control; the trend in California has been to scale back.
In 1995, the state Legislature barred units built after February 1 of that year from rent controls and ended strict regulations in some cities that prohibited rent increases if a unit was vacated.
The Los Angeles control rules limit annual rent increases for tenants in multi-family buildings built before October 1978. This fiscal year, the city allowed a 3% increase. Once a tenant moves, however, landlords can charge whatever someone will pay — but the cap on percentage increases still applies.
Tenants in rent-controlled buildings have heavy protections against eviction to ensure landlords can’t just kick them out to charge market rent.
One way out is under the Ellis Act.
During last decade’s housing boom, Ellis evictions soared. Despite the recent surge, the displacements remain far below those heights. In 2007, Los Angeles landlords evicted 1,352 households from rent-controlled units, compared with 250 last year.
To invoke the Ellis Act, property owners must either exit the business or demolish their buildings and put up new apartments. In Los Angeles, landlords can set the initial rent for those new units, although the apartments would then be subject to rent control, according to the city housing department. Owners can dedicate a certain number of units as affordable housing to avoid rent control.
The debate over Ellis has raged recently. A state tenant organization marched on the state Capitol in February, proclaiming a Renters’ Day of Action. Protests erupt in San Francisco to shame landlords.
In response, the California Apartment Assn. launched an Ellis-focused website to dispel what the site calls “myths and misconceptions.” Ellis is a safety valve for landlords, the association said. The group says landlords invoke Ellis for myriad reasons: frustration with rent control; to move themselves into a property; to avoid bankruptcy; or simply to retire.
“You cannot make somebody be a landlord,” said Beverly Kenworthy, executive director of the association’s Los Angeles branch. “If they want to get out of that business, this is the mechanism to do so.”
Enacted in the mid-1980s, the Ellis Act cemented the right of landlords to do just that. Many landlords who use the law today, however, are recent buyers of the property. Tenant groups and lawmakers have seized upon that fact to lobby for changes. Of the Los Angeles properties where owners filed to remove rent controlled units under Ellis in 2013, at least 51% had been purchased within the previous year, according to an analysis of city data and property records tracked by real estate firm DataQuick.
“We are not talking about the Ma and Pa landlords,” Gross said.
If longtime landlords want out, tenant groups argue, they can sell to another landlord. Longtime owners, however, probably would fetch less in a sale if properties couldn’t be converted tonewsingle-family homes or condominiums for sale. And shutting the door on Ellis would put the brakes on redevelopment, said Michael Cohanzad of Wiseman Development, which used the Ellis Act to start evictions against Shashou and others.