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One of the year's most heavily lobbied bills, aimed at restricting the conversion of rental apartments into condominiums in San Francisco, was rejected Wednesday in the Assembly Housing and Community Development Committee.

The measure, Senate Bill 1439, would allow San Francisco's city government to restrict or prohibit the conversions of apartment houses if their owners had held the property for less than five years.

It would carve out an exception to the Ellis Act, passed by the Legislature three decades ago to counter local rent control ordinances that barred rental owners from making such conversions. The Ellis Act allows rental units to be withdrawn from the market, and tenants evicted, if their owners go out of the rental housing business.

The San Francisco housing market is one of the nation's hottest, creating an incentive for investors to buy apartment houses (and some single-family rental homes) and make Ellis Act conversions. That trend has drawn a sharp reaction from city officials and local housing advocates, who complain that low- and moderate-income renters are being evicted without cause by greedy investors.

The city is exploring curbs on conversions that it can enact without an Ellis Act amendment, but broadly restricting conversions would require the amendment that SB 1439, carried by Sen. Mark Leno, would provide.

Landlord and business groups, meanwhile, mounted a full-court press to defeat the bill, seeing it as an opening wedge to repeal the Ellis Act altogether and contending that it would violate the rights of property owners to realize profits from their holdings.

After a lengthy hearing, the bill garnered three votes from the committee's Democratic members but two other Democrats voted against it, leaving it one vote short of the four required.

Whether the decision stands is uncertain, since Leno was granted "reconsideration" - in effect at least a few more days to persuade one of the no-voting Democrats, Cheryl Brown of San Bernardino or Sharon Quirk-Silva of Fullerton, to switch before the June 27 deadline for committee approval of bills. Or, it's possible that the provisions of SB 1439 could be amended into another bill and bypass the committee later in the session.

The bill has been up and down before. It was initially rejected on the Senate floor, but then resurrected on a second try and sent to the Assembly.

PHOTO: Sen. Mark Leno, D-San Francisco, shown here during session in the Senate chambers in March, is chairman of the two-house budget conference committee. The Sacramento Bee/Hector Amezcua


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