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Claim Seeks Nearly $11 Million in Waived Interest on Behalf of Landlords

Bob Kronovetrealty
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By Jorge Casuso

May 19, 2020 -- A claim filed on behalf of Santa Monica landlords is seeking $10.9 million in interest the City allegedly barred landlords from collecting on rent payments delayed by the impacts of the coronavirus.

In a letter Thursday, Rosario Perry put City officials on notice that a May 8 order barring landlords from charging tenants interest on unpaid rent under the Santa Monica's eviction moratorium is illegal.

"The City cannot quarantine our Constitution," Perry wrote in a two-page letter.

"If the City is anxious to help tenants without regard to tenants’ financial need, then the City will have to pay for their largesse," Perry wrote.

The supplemental order -- which bars collecting interest for a year after the order expires -- expanded the City's moratorium prohibiting the eviction of tenants unable to pay rent due to the economic impacts of COVID-19.

The Fourth Revised supplement issued by the City, Perry argues, "is illegal as a taking of property without just compensation, and as imposing damages without due process of law."

Filed on behalf of the Housing Reform Coalition of Los Angeles (HRCLA), the claim threatens a class action lawsuit unless the City immediately repeals the supplemental order.

Perry -- who estimates Santa Monica landlords will lose $3.6 million a month in interest through June -- said he is not challenging the order itself.

"While the City’s Order waiving interest due is clearly not constitutional, HRCLA intends not to challenge the legality of the rule," Perry wrote.

Instead, it intends "simply to demand that the City pay the lost interest to each and every HP (Housing Provider) who has lost interest due to it."

Perry based his calculations on an estimate that one third of the tenants in Santa Monica's 36,000 rental units "will not be paying April, May, and June 2020 rent directly due to the city’s moratorium."

Based on an average monthly rent he estimates is about $3,000 per unit, the total rent would add up to approximately $105 million per month, of which one-third, or about $36 million would be deferred.

The interest on the amount deferred for 12 months would be $3.6 million per month, or $10.9 million over three months, Perry estimated.

City spokesperson Constance Farrell said Monday that the letter was received by the City and is being reviewed.

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