Landlords Assail Panel’s Action on Rent Certification
A group of landlords has accused the Santa Monica Rent Control Board of using a state-mandated rent certification process to increase its power and encourage landlord-tenant strife.
Under a law sponsored by state Sen. Nicholas C. Petris (D-Oakland), the board is required to set maximum allowable rents for the city’s 30,000 rent-controlled units by Jan. 1, 1988. The first 5,000 notices were mailed to tenants and landlords this week.
The certification process is necessary because of “a lack of clarity in our original registration forms,” said Joel Martin Levy, general counsel for the board.
Rents are calculated by the board based on the amount charged per unit on April 10, 1979, a year before the city’s rent control ordinance went into effect, and on annual citywide increases and individual rent increases approved by the board.
It is what is omitted from the base rent figure that has ACTION, a group of about 600 rental property owners in Santa Monica, angry enough to bring legal action.
“In theory, it’s a great bill because it’ll straighten out what rents are once and for all,” said Geoffrey Strand, a member of ACTION (A Commitment to Insure Owners’ Needs). “But the way they’re handling it will increase tenant-landlord strife. Lawyers in this town are going to be dancing in the streets.”
ACTION’s chief complaint is that charges that may be passed on to tenants are not included in the maximum allowable base rent stated in the board’s letters to tenants and landlords. Possible charges include the board’s annual $84 registration fee per unit, school-tax levies, street-lighting assessments and voluntary side agreements for furniture, appliances or parking.
The group has filed a lawsuit in Superior Court on behalf of Carl J. Lambert, its vice president, charging that the letter is “replete with errors of law and fact and incomplete,” and will lead to unnecessary litigation.
“I’ve already had calls from people who don’t understand why the rent they’re paying, which includes the surcharges, is more than what’s stated in the letter,” said Thomas A. Nitti, Lambert’s attorney.
No Restraining Order
Superior Court Judge Raymond Choate refused to issue a temporary restraining order that would have halted the first mailing of 5,000. A report on that mailing is due at a Superior Court hearing scheduled for April 10.
Levy said the board did not include surcharges in the base rent figure because its computer was not capable of producing such itemized lists. He said that although it was too soon to assess reaction to the first mailing, he thought most questions could be answered over the telephone.
“I think they’re (ACTION) suffering from a form of paranoia,” Levy said. “Although we’ve chosen not to state what the surcharges are because our computer can’t handle it, we’ve explained that they are not included. Things won’t be as bad as they say.”
Levy’s assessment of the situation differs somewhat from that of Howell Tumlin, administrator of the board. Tumlin said there could be disputes over as many as 60% of city’s 30,000 rent-controlled units.
The board plans to temporarily double its staff and hire 24 more hearing examiners, clerks and analysts in anticipation of the extra load this year, he said.
Boosting Business
“This is just a thinly veiled attempt to increase business for themselves and for their attorney friends,” Strand said. “There are going to be 20,000 appearances by landlords and tenants.”
Landlords or tenants who disagree with the base rent stated in the letter have 30 days to appeal to the board, which then schedules a hearing date when both parties must appear.
Board hearings only resolve the maximum rent a landlord may charge and do not rule on whether a tenant was overcharged, Tumlin said. If tenants believe they are paying more than the certified rent listed in the letter, they may have a basis to file a lawsuit against the landlord. The maximum penalty set by the court for knowingly overcharging a tenant is three times the cost of the excess rent.
Levy predicted few cases would actually go to court. He said the 60% figure was based on an informal survey of 10 units. Six owners or tenants disputed the certified rent, but four of the problems were handled over the phone, Levy said.
ACTION also wants the board to first notify landlords of the maximum allowable rent before informing tenants. Landlords then would have a chance to correct any problems and tenant-landlord strife would be minimized, Strand said.
Time-Consuming Process
Levy said such a process would be too time-consuming. The board is backing a bill sponsored by Assemblyman Tom Hayden (D-Santa Monica) to extend the deadline for certifying rents. Levy said that if that bill passes, the board would consider notifying landlords first, as ACTION has requested.
“ACTION has no appreciation of the administrative difficulties involved in certifying 30,000 units,” Levy said. “If they did, they’d know we couldn’t notify landlords first, give them 30 days to appeal and then notify tenants--all in a year.”
The Petris bill gives the state’s five rent control districts that require rent registration--Santa Monica, Berkeley, Cotati, East Palo Alto and West Hollywood--until the end of the year to complete the process. Santa Monica is the largest of the five, Berkeley is second with 19,000 units, West Hollywood is third with 18,000, East Palo Alto is fourth with 2,600 and Cotati is fifth with 700 units.
Kip Wiley, a legislative consultant to Hayden, said the other four districts are not experiencing problems.
Linda Rook, Cotati’s rent stabilization coordinator, said the Petris bill was not creating problems there because the city certifies its 700 units annually.
Fewer Hearings
Renee Glover, rent control program administrator for East Palo Alto, said letters are scheduled to be out by the end of April and will include an itemized list of surcharges “to reduce the number of administrative hearings.”
In West Hollywood, Richard Dorsey Muller, director of the Rent Stabilization Commission, said the City Council will consider a rent certification proposal April 6.
West Hollywood’s 18,000 units were registered in 1985, at which time there was a 7% discrepancy rate between the amount tenants said they were paying and the amount landlords said they were charging. Muller said the commission is seeking authorization from the City Council to deal with the discrepancies, certify the undisputed rents and take action on the unregistered units.
