Landlord Tackles Rent Control-- and Wins
For a man who shuns publicity, landlord and attorney Lawrence Kates has a flair for theatrics when it comes to rent control.
Kates, 46, single-handedly blocked passage of a new Thousand Oaks rent-control law last week by serving eviction notices on tenants of his 496-unit Oakview apartment complex and threatening to evict the occupants of 310 more units--more than 22% of the city’s apartments. Kates is a partner in Standard Investments Co. of Los Angeles, which owns those apartments.
His threat succeeded in reversing a unanimous City Council vote earlier this month to place all of the city’s 3,600 rental units under rent control. The existing law covers only about a quarter of the city’s apartments.
Kates’ tactics in Thousand Oaks and other California cities have earned him a reputation as a man who can afford to fight rent control on principle, even if the financial cost is high.
‘Reacted With Guts’
“To my knowledge, no one has reacted with as much guts as Larry has, just to make a statement,” said Steve Carlson, executive director of the Sacramento-based California Housing Council, an association of the state’s largest landlords.
“I know that there are a lot of people who are saying, ‘Boy, I wish I had done that,’ ” Carlson said. “But I don’t think there are any people who could have.”
Kates, who declined to be interviewed, has said in the past that he and investors he represents own more than 20,000 rental units in several states. Kates’ rental holdings in California are considered to be among the largest in the state, Carlson said.
“For most people, this is an investment; for Larry Kates, it is his life,” said Sandy Gantz, owner of Gantz Investment Properties, which manages about 2,000 apartments in the San Fernando Valley.
“I don’t know of anyone who has threatened to do what Kates has,” Gantz said. “But I don’t know of anybody that owns that much property.”
‘Stands By Principles’
Michael Katz, an eviction attorney and president of the San Fernando Valley and Ventura County Apartment Assn., said Kates, a USC and Loyola Law School graduate, “stands by what he says and by his principles.”
City officials in Santa Monica, where Kates has fought and lost some of his fiercest battles, say he has contributed hundreds of thousands of dollars to campaigns against rent control.
“I would say that he has spent more money out of principle against rent control than rent control has cost him personally,” said Robert Myers, Santa Monica city attorney.
Ironically, what little is known about Kates’ personal life came to light as the result of a 1983 invasion-of-privacy and libel suit that he filed against several Santa Monica city officials, including former Mayor Ruth Goldway.
That suit, asking $30 million in damages, was filed shortly before a local election on a rent-control measure. It charged that officials disclosed information during the campaign about his wealth, his family and his political contributions.
In a May, 1983, deposition taken for the city, Kates testified that he was married, had three children and lived in Nevada, but he would not say in which city. He said he spent about 60% of his time in Nevada but came frequently to the Los Angeles area to conduct business.
Lawsuit Dropped
Questions about Kates’ business interests, which had been scheduled for a second deposition, were never asked, Myers said, because Kates dropped the lawsuit shortly after his first deposition.
Kates’ suit followed a campaign by Santa Monica landlords to pass a measure that would have weakened the city’s rent-control law by allowing owners to convert rental units into condominiums, Myers said. Kates contributed more than $50,000 to the campaign for the measure, which ultimately was defeated.
On another Santa Monica battlefront, Kates has for a number of years kept empty as many as 100 of the 526 units in his beachfront Santa Monica Shores apartment towers to protest the city’s strict rent-control laws. Tenants say it is only in the last eight weeks that the building has begun to fill up again.
Although Kates did not accomplish his goal in Santa Monica, his keeping rental units off the market forced the Thousand Oaks City Council in 1982 to change its rent-control law.
Thousand Oaks officials estimate that Kates was losing rental income of as much as $160,000 a month when he kept half of his 806 units in the city vacant during 1981 and 1982. After Kates said he would empty all the units, the City Council voted to amend its rent-control law and lift controls on vacated apartments, as Kates wanted.
“If a person has a substantial number of units in a community, a responsible city government will pay attention to his wishes and desires,” said John Smock, a lobbyist for the California Apartment Assn. He added, however, that he knew of no other city in which that tactic was successful.
Sympathy on Council
Although they complained last week that Kates had blackmailed the city to get his way, Thousand Oaks officials conceded that they were sympathetic to him and his views.
At least three of the five City Council members said that they are philosophically opposed to rent control but that they feel compelled to support some measures to protect senior citizens and other renters, because apartment vacancies in the city average less than 2%.
The rent-control movement in the city was started in part because of dramatic rent increases that Kates’ tenants received in the late 1970s, officials said. But, Assistant City Atty. Michael Martello said, now it is the newer landlords, those who bought their properties in the past three or four years, who have been raising rents to cover higher mortgage obligations.
“Larry was one of the principal causes of rent control, and other landlords here became angry with him,” Martello said. “Now he is angry with other landlords for their rent gouging.”
Tenants Warn of Suit
Tenants at Kates’ Oakview apartments say they are willing to mount a legal action challenging Kates’ right to carry out his threat to close their complex. But the City Council has postponed that battle by holding back on the proposed rent-control changes, at least until after the November election.
In the meantime, Kates has said he will not back down from a threat to close that building and possibly more in Thousand Oaks if the city extends rent control.
The last group of tenants who fought wholesale eviction from one of Kates’ properties ended up buying it from him. The 40 or so residents of Malibu Village Mobile Home Park on Pacific Coast Highway battled for two years before Kates agreed in 1982 to sell the 6 1/2-acre park for $2 million.
At that time, Kates said: “I am now convinced that the only answer to our growing housing problems in Los Angeles is for landlords and tenants to work out ways for the tenants to become owners.”
