By Jorge Casuso
June 3 – Santa Monica is cracking down on landlords who may be illegally living in or renting units in rent-controlled buildings that were removed from the rental market under a 1986 State law, The Lookout has learned.
To establish if the buildings are occupied illegally, City inspectors monitored 73 apartment buildings removed from rent control under the Ellis Act, which allows owners to get out of the rental business.
Some 30 buildings showed signs of being occupied -- an active water meter, mail being delivered or someone spotted inside, City officials said.
“The City obtained information that led it to believe people were inhabiting units,” said Ybin Shen, who is handing the issue for the City Attorneys office.
The Planning Department then sent letters advising the owners that, under a 1989 City law, they are required to have a re-occupancy permit which they can obtain for $1,600.
“All 30 showed some sign of people living in them,” said Gina Szilak, an assistant City planner. “Some of these go back to 1989. The question is, ‘What has been done with those buildings?’”
Szilak believes that if the buildings are vacant, they should be boarded up.
“If it’s not boarded up, people can get in,” she said. “If you’re not living in it, what are you doing with it?”
While most buildings are removed under the Ellis Act to pave the way for condominiums or commercial development, 73 apartment buildings remain standing with no building permit activity, a Rent Control Board report concluded.
More than a dozen of the targeted owners say they or family members or friends are legally occupying the units by not paying rent. And they have hired local attorneys to fight back.
“It’s bogus,” said Thomas Nitti, an attorney who is representing five of the property owners. “This is simply a way for the City to penalize owners who use the Ellis law, and it’s a way for the City to raise revenues.”
Nitti believes the 1989 ordinance that requires the owner of an Ellised building to obtain a re-occupancy permit constitutes an “illegal tax.”
“When you file Ellis, you go out of the rental business, you don’t go out of occupancy,” Nitti said. “If you want to occupy your own building that you have an occupancy permit for, you shouldn’t have to get a re-occupancy permit.”
Nitti said the City has not responded to the complaint letters he delivered on April 16 on behalf of his clients.
“The letters I’ve sent the City have been met with silence,” he said.
Officials at the City Attorneys office are steering away from discussing the specifics of the crackdown.
“These are all pending cases,” said Deputy City Attorney Adam Radinsky, who is in charge of the consumer protection unit.
Radinsky noted that “re-renting units generally does violate the Ellis Act and Rent Board regulations that implement the Ellis Act.
“We would be definitely concerned if there were properties re-rented in violation of the rental law,” he said. “These are laws that we take very seriously for the preservation of rental housing.”
But Radinsky acknowledges that “it’s possible (the buildings) are owner occupied and not re-rented.”
According to the Planning Department, some 20 owners have responded to the City’s letter, including nine who have filed re-occupancy permits.
“They’re saying how they’re using it,” Szilak said. “Some say they bought the building and didn’t know” about the Ellis restrictions.
“Six did nothing and filed noting,” she added. “Those are just blowing us off totally.”
The crackdown was initiated at the request of the Rent Control Board, which created a task force “to monitor withdrawn properties to ensure that owners adhere to use-restrictions imposed by the withdrawal,” officials said.
Tracy Condon, the Rent Board’s administrator, said the current economic downturn is likely making it difficult for owners to obtain financing to build condominiums.
It is unclear what actions the City will take against owners who are knowingly violating the Ellis Act, but Condon said lawsuits could be filed by “former tenants, the City or the Rent Board.”
Under the Ellis Act, a landlord must inform former tenants that they are going back into the rental business and offer to re-rent them the units.
It is also unclear what would happen to the rents if the units are being illegally rented. Would the rates revert back to the old rent-control rates? Would the tenants be evicted?
For more information read "Fewer Rent Control Properties Removed Under Ellis," April 30, 2009