Judge lifts injunction on law designed to remove abusers
SM COURTHOUSE — A judge has lifted a temporary injunction against a controversial housing law, allowing landlords to once again increase the rent on part-time tenants living in rent-controlled units.
Santa Monica Superior Court Judge James Bascue, who issued the injunction in November, credited officials for changing Regulation 3304 so the rent control board — and not landlords — has the authority to set higher rents. Judge Bascue said the rent control board now is likely to prevail in a pending lawsuit that challenges the controversial law.
“The problem with the prior law was that it gave unfettered power to the landlord,” Judge Bascue said. “I find, on its face … the new regulation complies with the law, as written.”
“The problem with the prior law was that it gave unfettered power to the landlord.” — — JUDGE JAMES BASCUE Santa Monica Superior Court
Passed last March under political pressure from lobbyists in Sacramento, 3304 lets local landlords charge market rates on tenants who use their rent-controlled units for part-time use such as vacation homes, offices or storage. The rationale behind 3304 was that rent control was designed to keep housing costs low, but has been hijacked by some renters who use the inexpensive units for something other than living in them.
Prominent real estate investor Robert Bisno last year filed a lawsuit against the rent control board, saying it overstepped its bounds when it passed the law. Bisno owns a home in an exclusive enclave of Beverly Hills, but also rents a two-bedroom rent-controlled apartment near the beach in Santa Monica, according to court documents. If 3304 is enforced, Bisno — who pays about $1,000 — will have to pay nearly $4,000 a month more in rent.
Bisno’s suit prompted Judge Bascue to issue the injunction. Allan Abshez, Bisno’s lawyer, said 3304 is illegal because it goes beyond the scope of City Hall’s rent control law. While rent control recognizes landlords should be able to get a fair return on their rental units, it says nothing about whether or not the tenant must actually live in the unit. In order for part-time tenants to be denied rent control, residents must vote for an amendment to the rent law, Abshez contends.
Judge Bascue will hear arguments in Bisno’s lawsuit on April 22. In the mean-time, rent control board officials have to figure out how to proceed with dozens of cases decided before the law was changed. Judge Bascue ruled the law was illegal from the time it was passed on March 15, 2003 until it was amended on Jan. 8. The decision was based on the notion that landlords shouldn’t have the ability to set their own price on units.
Though the pending lawsuit involves only Bisno, rent board officials have indicated they would re-evaluate each case. Michaelyn Jones, an attorney for the rent control board, said because the determination already had been made that some tenants aren’t full-time, the rent control board could avoid retrying each case and simply determine what the higher rent should be. Under the law, the rent control board sets the higher rent based on a slew of factors, including how much neighboring apartments command.
Attorney Mark Palmer, whose client Giles Hunt saw his rent double as a result of the law, said he wants all court rulings to apply to tenants targeted under 3304, not just to Bisno.
“They’ve taken the position that every tenant has to take on City Hall and sue them,” he said. “Who can afford to do that?”
In the end, Judge Bascue decided that’s how the court’s rulings will apply to other tenants and the issue will be discussed at the April hearing. In the meantime, rent board officials assured Judge Bascue they would look at each case fairly. After the ruling, rent board control attorney Keith Kresge said renters who feel they are being overcharged by their landlords can file a complaint with the rent control office at City Hall.
A total of 120 petitions have been filed by landlords with the rent control board under 3304. Of those, 39 were dismissed or withdrawn, and 27 were still pending, said Tracy Condon, a spokeswoman for the rent control board. Thirty-eight decisions were handed down, with 25 rental hikes granted and 13 denied. Another 16 were automatically approved because the tenants didn’t challenge them.
Rosario Perry, a prominent Santa Monica attorney who represents landlords, said there are thousands more units in Santa Monica used by people who actually live elsewhere. He said the law is important because it allows landlords to ensure rent control isn’t abused.
“I estimate 3,000 units in Santa Monica,” Perry said. “Most owners don’t want to get involved with rent control, and the hearings and everything involved … they just don’t want to bother with it.”
Originally published in the Santa Monica Daily Press print edition on February 5, 2004. Read the original PDF.