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Santa Monica Wins State's First Court Order Enforcing Low-Income Housing Restriction

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By Jorge Casuso

October 21, 2019 -- Santa Monica is likely the first California city to win a judgment against a property owner for renting a low-income unit to a tenant who doesn't meet the income qualifications.

Under a court settlement, Marble One, LLC will pay the City $120,000 and hire a third-party property manager after renting a deed restricted unit for twice the eligible rent.

Under the court order, Marble One, which denied the liability, must pay a minimum penalty of $10,000 per future violation of Santa Monica's affordable housing laws, according to the City Attorney's Office.

Marble One bought the deed-restricted condominium unit in 2012 in a 33-unit building constructed in 2005, said Deputy City Attorney Gary Rhoades.

“These two allegations -- renting to a tenant who is over-income and then charging more than the rent cap allows -- are the two most common types of owner violations in these cases,” Rhoades said.

“In nearly all of the City’s income-restricted units, these acts would be violations of both the deed restriction recorded against the property and the City’s Affordable Housing Production Program Ordinance.”

The case is unusual because most of the violations caught by the City's Housing Division are corrected without going to court, Rhoades said.

The rest of the violations concerning deed restricted units are referred to the City Attorney's office for enforcement and are resolved without need for legal action, he said.

"There may be potentially a lot that may be temporarily out of compliance, but (housing) staff is able to nip them in the bud," Rhoades said.

The Housing Division monitors all of the affordable deed-restricted units built under Santa Monica's affordable housing laws, among the most ambitious in the state.

Property owners must provide the division with annual reports on each of the units showing the tenants qualify under the income guidelines, Rhoades said.

The tenant currently occupying the deed restricted condominium unit will be paid relocation fees by the owner and replaced with an income-qualified tenant, Rhoades said.

"The tenant in the apartment wasn't clear she was supposed to be a low-income tenant," he said.

Under Proposition R, approved by Santa Monica voters in 1999, 30 percent of new multifamily housing must be be affordable to low- and moderate-income households.

Since the law went into effect, 1,966 of the 5,230 units built -- or 38 percent -- have been affordable, according to the latest Affordable Housing Progress report ("Santa Monica Sees Lowest Affordable Housing Production in More Than a Decade," May 13, 2019).

In addition, a total of 1,762 units have been proposed for Downtown, where most of the new housing is being developed.

According to the City Attorney’s Office, the settlement with Marble One "appears to be the first judgment and injunction in California, stipulated or otherwise, in a suit brought to enforce the terms of deed-restricted affordable rental housing."

“This lawsuit and judgment protect the City’s investment in affordable housing,” said City Attorney Lane Dilg.

“The City has secured income-restrictions on over 1,000 rental units and we will fight to preserve each and every one for the low-income tenants they were intended to house.”

The money paid by Marble One will go into the Housing Trust Fund for future affordable housing, Rhoades said.

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