Lincoln Place Tenants Assoc. v. City of Los Angeles (September 19, 2007, B193235 [2nd Dist. , Div. 7]) ___ Cal. App. 4th ____;

By Alexis M. Pelosi

In this case, the Second District Court of Appeal confirmed that the Ellis Act does not preempt CEQA and that cities have a continuing obligation to comply with mitigation measures required under CEQA.

Here, a developer sought to demolish an existing apartment complex and replace it with a combination of market-rate condominiums, town homes, moderate-income town homes and low-income rental units.  Mitigation for the project included an obligation by the developer to relocate existing tenants to other vacant units on the site before various permits or approvals could be obtained.  The developer also further agreed, voluntarily, to phase the project, not involuntarily displace existing tenants and not proceed with any phase of the project unless every tenant in that phase was relocated to an existing unit or new unit.

Almost 10 years after the project was approved, the developer began serving the remaining tenants with eviction notices under the Ellis Act — an act that prohibits public entities from requiring property owners to remain in the rental or leasing business by allowing landlords to withdraw rental units from the market.  The court held that while the Ellis Act protects an owner’s right to control its property, it does not preempt a developer’s obligation to comply with the requirement to mitigate project impacts under CEQA.  Here, the City had imposed relocation obligations on the developer and the developer had agreed to additional relocation benefits, to mitigate impacts under CEQA and obtain project approvals.  The fact that the developer now wants to “go out” of the rental business does not discontinue its obligation to mitigate those impacts.  Accordingly, the Ellis Act does not preempt CEQA and must be applied subject to any conditions required to mitigate impacts under CEQA.

For more information please contact Alexis Pelosi.  Alexis Pelosi is an attorney in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office.