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Bloom's Bill to Close Ellis "Loopholes" Headed for Governor's Signature

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By Jorge Casuso

September 5, 2019 -- A Santa Monica lawmaker's bill that attempts to close loopholes in the Ellis Act was approved by the California Assembly Wednesday and is expected to be signed by the Governor into law.

AB 1399, sponsored by Assemblymember Richard Bloom, places conditions and restrictions on landlords who evict tenants in order to exit the rental market under the 1985 Ellis Act.

Under the bill, owners who remove their units under the Ellis Act can no longer pay the displaced tenants "liquidated damages in lieu of offering them the opportunity to re-rent their former unit," Bloom's office said.

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Currently, they can offer the tenants the equivalent of as much as six months rent.

In addition, the bill clarifies that "the date on which the accommodations are deemed to have been withdrawn from the rental market is the date on which the final tenancy among all tenants is terminated."

“The housing crisis has left tenants increasingly vulnerable in the face of rapidly escalating housing costs,” said Bloom, who was a Santa Monica mayor.

“Though insulated from some of these price increases, tenants in rent control units are at risk of displacement by landlords who want to exploit loopholes to raise rents to market prices."

The bill was introduced one year after a similar bill sponsored by Bloom -- AB 2364 -- failed on the assembly floor last year.

The Ellis Act was a reaction to the passage of rent control by voters in Santa Monica and a dozen other California communities where many small landlords were struggling under restrictive rent caps.

The law gives rental property owners the right to exit the rental housing market under certain conditions and restrictions.

They include a requirement to notify tenants 120 days prior to withdrawing a unit, with a longer one-year notification requirement for tenants who are disabled or older than 62.

Bloom says landlords are subverting the Ellis Act by using it to "often withdraw individual units from the rental market and return them in a piecemeal manner to avoid the Act's restrictions and to evade rent control."

Since its enactment, the Ellis Act has been used to withdraw 3,042 units from the the Santa Monica market, according to a 2017 report by the Santa Monica Rent Control Board.

Bloom estimates that the Los Angeles area has lost more than 20,000 rent-controlled units since 2001, “with tens of thousands of tenants evicted in the process.”

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