City’s Biggest Landlord Tries to Jack Up Former Owner’s Rent

By Olin Ericksen
Staff Writer

March 30 -- The former owner and developer of Santa Monica’s two largest apartment buildings, who is a longtime foe of rent control, may soon find himself having to prove that he and his family actually live in their rent-controlled units there.

Larry Kates -- who built the twin 550-unit beachside Santa Monica Shores towers in the 1970s and sold it five years ago for $95 million -- is being challenged by the new owners, Douglas Emmett, which filed a petition alleging that Kates and his family do not live in five of the six units they rent on the property.

The petition filed with the Rent Control Board on Friday is one of 157 filed under a regulation the board approved two years ago that allows landlords to raise to market rates the rents of units that are not being used by a tenant as a primary residence.

In the case of the Kates, the family's rents could triple from a monthly rate of approximately $1,050 for each two-bedroom unit to nearly $4,000 per unit -- or a total of $15,000 more per month if it is proved they do not live on site.

The petition alleges that six Kates family members listed on every lease do not use the apartments as their primary residences, but, instead, use the units as storage spaces or offices, according to a staff official with the rent control board.

As proof, Douglas Emmett included copies of various checks written by the family mambers with different addresses, grant deeds to other properties owned by the family and declarations taken by several employees who work on site, such as the property manager, according to the rent board’s spokesperson Tracy Condon.

The Kates' family attorney, Sherman Stacey, declined to comment on the allegations or any of the evidence offered, saying he has not yet reviewed the petition.

An avid advocate of landlord rights, Kates bankrolled a number of ballot initiatives and court challenges in 1980s in an effort to erode rent control.

They included the TORCA initiative that allowed tenants to purchase their rent-controlled units and a court challenge in the early 1980s that was a precursor to the Ellis Act, the 1984 State law that allows landlords of rent-controlled buildings to go out of the rental business.

“He’s what I call a check-book activist of the first order,” said Wes Wellman, the owner of Wellman Realty Company and a longtime rent control foe. “No one was more willing to put money behind his beliefs than him.

“If he thought somebody had a good case against rent control, he would fund it,” Wellman said.

Douglas Emmett, the largest property holder in Santa Monica, according to the Los Angeles Business Journal, has filed the most petitions under the regulation that went into effect in March 2003, Condon said.

Of the 157 petitions filed, 65 have been filed by the company, Condon said. Of these, 56 have been filed for units in the Santa Monica Shores towers at 2700 and 2800 Neilson Way. Nine more petitions have been filed for Pacific Plaza, the company’s high-rise at 1431 Ocean Avenue.

Douglas Emmett, which employs some 300 workers, owns a portfolio of nearly 10 million square feet worth $2.5 billion spread across Beverly Hills, the San Fernando Valley, Brentwood, Westwood and Santa Monica, according to the Business Journal.

The petition, said Condon, has several hurdles left to clear, including an initial review by staff and a subsequent hearing by the board’s hearing examiner. The decision can be appealed to the rent board.

Douglas Emmett had filed petitions on the Kates units in July 2003, but they were dismissed because the tenants had nor been properly noticed, Condon said.

The petitions resubmitted Friday included the names of the tenants purportedly living in the units, she said. This time, the tenants were properly noticed.

They are Laurence Kates, Ynez Kates, April Kates, Mimi Kates, Heather Kates and Lawryn Kates.

The rent board staff will look at each petition individually, Condon said.

Under the regulation, "occupancy" does not require that the tenant "be physically present in the unit at all times or continuously, but that it is the tenant's usual residence of return."

A number of factors would be weighed as evidence that the unit is not the tenant's residence.

Of the 157 petitions filed under the regulation, 45 have been granted after hearings and 22 have been denied, Condon said. Another 21 were granted administratively after the tenants declined to challenge them.

In addition, 38 have been dismissed by staff because the tenants were improperly noticed or the landlord failed to establish a prima face case, Condon said. Eleven petitions are pending, including the five filed against the Kates family.

Jorge Casuso contributed to this report