Myers Cites Legal Pitfalls in Tenant Incentive Proposal
A Santa Monica landlords organization has falsely claimed that tenants would share in the profits from a proposed initiative that would allow unlimited rent increases on vacated apartments, City Atty. Robert M. Myers has said.
Myers told the City Council on Tuesday that the so-called Tenant Incentive Program, which is expected to appear on the June ballot, offers nothing to tenants. He said the landlord group that wrote the proposal either made a “major drafting error” or intentionally deceived the public.
“As written, the measure technically provides that no existing tenants would receive payments under the Tenant Incentive Program,” Myers said in a report. He added that the plan could be interpreted as an illegal tax measure and may be fraught with implementation problems.
A spokesman for the landlords group said that Myers’ criticism was based on personal bias and that the city attorney was deliberately trying to cloud the issue for voters.
Myers’ report came less than one week after the county registrar-recorder’s office verified that ACTION (A Commitment to Insure Owners’ Needs) had collected enough signatures to qualify the proposal for the June 3 ballot. The measure is expected to appear on the ballot as written.
Later Tuesday, the council ordered its staff to draft a possible ballot proposal that would allow tenants and landlords to negotiate rent increases for apartment improvements. Councilmen Dennis Zane and James P. Conn, two leaders of the renters’ rights movement, oppose that plan. But Councilman David G. Epstein said he proposed the measure as an alternative to the landlords’ plan.
Plan Not Endorsed
The Tenant Incentive Program has not been endorsed by any members of the City Council or the Rent Control Board.
After Myers’ report Tuesday, opponents predicted that the plan is destined for defeat. But supporters remained confident.
Geoffrey S. Strand, a landlord who is promoting the Tenant Incentive Program, said Myers’ objections are unfounded. He said his organization would stand behind the measure and campaign vigorously for its passage.
“Myers is just trying to make it look to tenants as if this thing is confusing,” Strand said. “But he knows that it’s really a very straightforward proposal. He’s trying to cloud a very clear issue.”
Opposition to the plan is led by Santa Monicans for Renters’ Rights, the group that created the city’s stringent rent control law. In a hastily called press conference, leaders of the organization said Myers’ report proves the landlord proposal is “major hoax” on tenants.
“The measure was sold as providing an incentive to existing tenants,” said Zane, a spokesman for the group. “But the city attorney has pointed out that no tenants will benefit. The Tenant Incentive Program is nothing more than an incentive for landlords to move tenants out.”
The Tenant Incentive Program would significantly alter the city’s rent control charter amendment by nullifying a section of the law that prohibits landlords from raising rents on vacated apartment units.
Under the plan, landlords would be allowed to establish a “new base rent” each time a tenant moved. Promoters of the plan have said that an apartment owner would share the profits from the rent increase with the remaining “qualified tenants” by multiplying the amount of one month’s rent increase by 10 and dispersing the sum among the building’s “qualified units.”
Landlord Interpretation
For example, a landlord who raised the rent on an apartment by $400 a month would divide $4,000 among his tenants one time, according to the landlord interpretation of the plan. An apartment owner would not be allowed to raise his rent if the vacancy was the result of an unfair eviction as determined by the city’s Rent Control Board, promoters of the plan have said.
Myers contends that the plan is improperly worded. And he said the text of the landlord proposal does not appear to be in “strict compliance” with the election code in several important technical areas, such as its phrasing and references to the city Charter.
Myers said the section that is supposed to spell out how tenants will be paid under the plan actually guarantees that tenants will not be paid.
By stating that payment is limited to “qualified tenants” in “qualified units,” Myers said the proposal technically eliminates everyone living in rent-controlled apartments. The only tenants who might satisfy the measure’s standard for payment would be tenants who moved into an apartment after the adoption of the plan, Myers said.
According to the proposal, a qualified tenant is one who “resides on the property and has paid the lawful rent demanded by the landlord during the past six months.”
But Meyers said in his report that “the phrase ‘qualified units’ is defined in the measure to be those units which are eligible for vacancy decontrol, (for example) certain vacant units.”
Thus, Meyers wrote, the provision that the landlord shall pay qualified tenants in qualified units “technically results in no current tenants being entitled to receive payments under the measure.”
Possible Tax
Myers said a preliminary review also indicates that the rent sharing required by the plan could be seen as a tax on landlords. If that is the case, the proposal would require a two-thirds voter majority to pass. Myers said the tax might also be illegal because it would be used for private instead of public purposes.
Finally, Myers expressed concerns about the implementation of the plan. Organizers have said the Rent Control Board would administer the program, but Myers said the proposal may actually exclude the board from becoming involved.
Despite Myers’ criticism, Strand said his organization is satisfied that the proposal provides everything it is supposed to give to tenants and apartment owners. He called Myers’ concerns that the proposal may be a tax measure “ludicrous.”
‘That’s Clear’
On other matters, Strand said the measure plainly empowers the Rent Control Board to administer enforcement. And he said the “qualified tenant” section of the proposal clearly refers to tenants who live in a building.
“That’s as clear as it can possibly be,” Strand said. “I don’t think there’s any problem with the language.” Strand also predicted that the measure would pass.
“When renters see what the Tenant Incentive Program is all about they will vote for it,” Strand said. “It’s as simple as that. “This has a broader base than our opponents wants to admit. And it scares the hell out of them.” But tenant activists contended that Myers’ report has essentially slammed the door shut on the proposal.
