Judge Rules Against Returning Renovated Santa Monica Apartment Building to Rent Control

By Niki Cervantes
Staff Writer

April 24, 2018 -- A Los Angeles County Superior Court judge ruled last week that the City's Rent Control Board lacked to power to revoke a removal permit granted a quarter century ago.

The decision -- which landlords are hailing as a check on the Rent Board's authority -- allows the owner of a 13-unit apartment building at 1041 20th to continue charging tenants market rates.

The permit, granted by the Board in 1993, allowed the landlord to remove his building from the rolls as “uninhabitable” and “incapable of being made habitable in an economically feasible manner,” although the owner intended renovate it, according to the suit.

But in March of 2016, the Board's new general counsel notified James Corrigan, the principal shareholder, and his tenants that the building would be subject to rent control from then on.

In an April 18 ruling, Los Angeles County Superior Court Judge Gerald Rosenberg said the board has “no authority or power to revoke or otherwise modify” the exclusion from rent control authorized a quarter of a century earlier.

The board “did not proceed in the manner required by law,” Rosenberg said. “The Plaintiff/Petitioner relied upon the representations and promises made by the Board and its legal and administrative staffs.”

A representative of the board was not immediately available for comment.

In the decades since the building was removed from rent control, the owner in the case spent extensively on renovations and repairs, including a 2002 refinance appraisal, the lawsuit said.

The landlord's actions were influenced by the Rent Board's decision to remove the property from rent control, allowing "rents [to] be raised at any time to market rates."

In 2013, the plaintiff refinanced the property again and incurred a repayment obligation of $2.55 million dollars, Woods said.

“As before, the appraisal based the value of the property in part upon the fact that it was not subject to the restrictions of rent control,” the suit said.

Local landlords hailed the decision, which they said was the fair thing to do.

"Obviously, you can't go back on your word," said Elaine Golden-Gealer, who heads the ACTION Apartment Association, of which the plaintiff is a member.

"How can you depend on the government when they change their decision," she said.

It is unclear if the case applies to other landlords, landlord representatives said.

Voters in the City of Santa Monica, along with a scattering of municipalities in California, approved rent control in 1978 as a reaction to a period of soaring rent hikes.

Landlords have consistently fought back, and two major state laws over the decades have allowed landlords to raise the rents on most vacated rent control units to market rates or choose go out of the rental market.