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L.A. apartment owners charged with allegedly evicting tenants, then renting their units via Airbnb

After years of watching the supply of affordable housing plummet, evictions and demolitions surge and landlords score quick profits with short-term rentals, Los Angeles officials are striking back.

For the first time, the city attorney’s office has filed criminal charges alleging that a building’s owners offered units for rent on Airbnb after booting out tenants, officials said Monday.

The misdemeanor charges, along with civil suits filed against the owners of three other buildings, are intended to send a signal to other landlords breaking city rent control laws as L.A. confronts an affordable-housing crisis.

“Given that shortage of affordable housing, illegally converting rental units to hotels or short-rentals has got to stop,” City Atty. Mike Feuer said at a news conference Monday. “My office is going to intervene to preserve rent-stabilized units and restore those units when we allege they’ve been unlawfully taken off the market.”

It’s unknown how many illegal short-term rentals are operating in L.A., but Feuer said his office has made it a priority to investigate such complaints.

Carol J. Alsman and LSJB Investments LLC, who own a four-unit building at 500 N. Genesee Ave. in the Fairfax district, were charged last week with six misdemeanor counts of violating city zoning, building code and rent-control laws.

The complaint alleges that they evicted tenants under the Ellis Act, a state law that allows landlords to get out of the rental business. The law requires landlords to pay for relocation fees and notify tenants if they intend to re-rent the units within five years.

The owners later rented those units for more than $550 a night through Airbnb and failed to allow former tenants an opportunity to re-rent those units, the complaint alleges.

“Obviously there is a great profit to be made if you could, on your whim, change your apartment unit into a nightly hotel rental,” Feuer said.

The cases underscore the depths of the city’s housing crisis. More than 1,000 rent-controlled apartments in the city were removed from the market last year — a nearly threefold increase since 2013, an analysis of housing data found earlier this year. Evictions from such units have doubled over the same time.

Across L.A., more than 20,000 rent-controlled units have been taken off the market since 2001, city records show.

Tenant advocates say the removal of such units has hurt the supply of affordable housing at a time when L.A. has become one of the least affordable cities in the country.

Three evicted tenants sued the owners of the Genesee building last year after they noticed their units listed on Airbnb weeks after they moved out. The civil case is still pending.

Alsman could not be reached for comment.

Former Genesee tenant Carrie Kirshman said she believes the city attorney filing bolsters her claim that her old apartment was illegally re-rented.

“Landlords need to know that there are consequences to these kind of actions,” Kirshman said.

Randy Renick, an attorney representing tenants at the Genesee Avenue building, said it’s encouraging that the city attorney's office is taking the issue seriously, but said it should also go after short-term rental sites.

“Without Airbnb, none of these landlords would be engaging in this scam,” Renick said.

In a statement, Airbnb spokeswoman Alison Schumer said that “we strongly oppose real estate speculators who illegally evict tenants and abuse platforms like ours in search of a quick buck.”

A two-bedroom apartment in the Genesee Avenue building was also listed on HomeAway on Monday for more than $400 a night, a listing on the short-term rental company’s website shows.

The city attorney’s office said it will send a list of Ellis Act properties to Airbnb and other short-term rental platforms to prevent listing of similar properties.

Rent control in L.A. primarily applies to multifamily buildings built before October 1978. When a new tenant moves in, a landlord can set the rent as high as someone is willing to pay, but rent increases in subsequent years would be capped — recently at 3%.

Tenants in rent-controlled buildings have strong protections against eviction to ensure landlords can't kick them out to charge higher market rents.

But under the Ellis Act, passed in 1985, landlords are able to evict tenants if they intend to either take the housing off the rental market or demolish the building to put up new apartments.

The practice has sparked a backlash in Los Angeles and San Francisco. Efforts in recent years by state legislators to amend the law failed amid opposition from the real estate industry.

The San Francisco city attorney’s office in 2014 filed civil suits against owners of two rent-controlled properties for evicting tenants and illegally converting them to short-term rentals. The landlords settled last year for nearly $400,000, according to the city attorney’s office.

On Monday, Feuer also filed civil suits against the owners of three rent-controlled apartment buildings, alleging that the property owners are illegally operating and advertising them as hotels.

They include two properties on Ocean Front Walk in Venice and one on North Van Ness Avenue in Hollywood. The three buildings have more than 120 units, according to the city attorney’s office.

The lawsuits seek a court-appointed receiver to operate the three properties until they are brought into compliance, as well as restitution and civil penalties.

Renting out apartments or houses for short stays is illegal in many residential areas, according to city planning officials. The housing department received dozens of complaints about "illegal usage" of apartment buildings last year, officials said.

Residents have long complained that the city has failed to take action against such rentals. Feuer said his attorneys prosecuted the cases because they were able to substantiate complaints brought forward in enforcement orders filed by the city housing department.

City leaders have proposed changes to rein in short-term rental abuses, such as limiting people to only rent out their primary residence for up to 120 days a year.

Hosts would also be barred from offering apartments that fall under rent stabilization or affordable-housing covenants, and would have to pay the same kind of lodging taxes as hotels, which would go into a city fund for affordable housing.

"Simple regulations that allow honest home-sharing while making it easier to go after rogue operators who are running de facto hotels will help protect affordable housing and the character of our neighborhoods,” Councilman Mike Bonin said.

Times staff writer Emily Alpert Reyes contributed to this report.

ben.poston@latimes.com

Twitter: @bposton

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UPDATES:

4:20 p.m.: This article was updated with additional reporting and editing.

This article was first posted at 12:35 p.m.

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