Carrie Kirshman and Nina Giovannitti were close neighbors at their Spanish villa apartments in Fairfax, sharing keys, collecting each other's mail and tending to a communal garden in the backyard.
Their rent-controlled building allowed them to enjoy below-market rents of less than $2,000 a month for their two-bedroom pads in the upscale neighborhood. That came to an end in late 2013 when the owners evicted them under the Ellis Act, a state law that allows landlords to get out of the rental business.
Comparable apartments in Fairfax were going for more than twice as much. Kirshman and Giovannitti were forced to relocate to Mid-Wilshire last year.
"I lived there for 21 years and I was thrown out of my home," Kirshman said. "Just because I didn't own it didn't make it less so my home."
Within weeks, their apartments began appearing on Airbnb — a short-term rental site geared at tourists — for nightly rates that could total $15,000 a month, they said.
Attorneys representing former tenants at 500 N. Genesee Avenue are suing Airbnb and the property owners, who they say violated the city's Rent Stabilization Ordinance.
It marks the first time in Los Angeles that tenants have sued a landlord for withdrawing rent-controlled apartments under the Ellis Act and converting them to short-term rentals, according to the Los Angeles Alliance for a New Economy, an advocacy group allied with labor unions.
Tenant advocacy groups say it's part of a growing problem that has removed thousands of affordable housing units from the market in L.A.
A lawsuit filed Wednesday in Los Angeles County Superior Court seeks damages and an injunction to return apartment units to tenants under previous rates.
"By terminating long-term tenancies and dedicating rental units to short-term stays, landlords evade the city's rent-control regulations and unfairly cash in on higher nightly rates," the civil complaint says.
The lawsuit lists the defendants as Airbnb, LSJB Investments LLC, and Carol Alsman. Attorneys Randy Renick and Nancy Hanna are representing the plaintiffs.
"We strongly oppose real estate speculators who illegally evict tenants and abuse platforms like ours in search of a quick buck," an Airbnb spokeswoman said in a statement. "We continue to work with policymakers to strengthen rules that protect tenants and communities."
Alsman declined to comment.
Tenants in rent-controlled buildings have strong protections against eviction to ensure landlords can't force them out to charge higher market rents. Housing rights advocates say property owners use the Ellis Act to skirt those safeguards.
To invoke the state law, property owners must either exit the business or demolish their buildings to put up new apartments or condos. In the Fairfax case, the owners would be in violation of the rent control ordinance if they rented them via Airbnb for 30 days or more to the same tenant, a city housing department official said.
A complaint was filed last December that the building was being operated as a hotel and short-term rental, but an inspector was unable to verify the information, the official said.
The City Council's Housing Committee has discussed ways to strengthen enforcement of Ellis Act provisions and preserve affordable housing, including an annual cap on demolitions of rent-controlled buildings and withholding demolition permits until other permits for new construction have been issued. The committee has asked several city agencies to report back on those issues early next year.
Councilman Paul Koretz said Ellis Act evictions are "dramatically reducing affordable housing in the city."
"I think through enforcement and legislation, we will try to get a handle on this," Koretz said. "Clearly this is a negative for everyone except developers."
Renting out apartments or houses for short stays is illegal in many residential areas, according to city planning officials. The housing department has received dozens of complaints alleging illegal usage of apartment buildings this year, one official said.
Dean Wehrli, a senior vice president with John Burns Real Estate Consulting, said short-term rental conversions might make more sense in places without rent-control protections, where a landlord could simply let a lease expire and then convert the unit into a short-term rental, he said.
A landlord must also consider the political blowback for evicting longtime tenants in favor of tourists who pay more, Wehrli said.
"In L.A. I wouldn't touch it," he said.