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WHAT DOES THE RENT CONTROL BOARD
THINK OF OWNERS NOW AFTER PAYING $186,216?

You must aware that since the first day our Santa Monica properties became subject to rent control in 1979, the city fathers— (which includes the City Council as well as the Rent Control Board) have spent night and day dreaming up ways to “screw landlords.” These have not just been normal policies. These rules were designed to “KILL YOU AND ME.” If one set of rules was not harsh enough— give the City some time— they will come up with more repressive ones. Sort of like Hitler figuring out how to wipe out the Jews.

An average owner might be able to live with some form of rent control. In Los Angeles, for example, you never got the feeling that a landlord was “Public Enemy #1.”

However, Santa Monica took a totally different approach. The objective was to make an owner’s life intolerable, and if at all possible, to take property rights away from owners, and maybe take the owner’s property away from him if they caught him in what they consider a nefarious crime. Maybe he talked nasty to a tenant during a disagreement. Who knows: Maybe he wanted the rent to be paid on time?

I can’t count the number of landlords who have been driven to an early grave because of Santa Monica Rent Control policies. The City Council has not been far behind in this type of aggression toward all landlords.

And, frankly, it is no different today. Just give the city fathers an opening, and they will attempt to make your life miserable without giving you anything resembling a “fair shake.”

Is it any wonder many feel (myself included) that if we can fight the City and its policies, we will do it. I hope you feel that way, too!!

That is why we at ACTION decided that the City Council and the Rent Board need court battles. It is a bitter bill to swallow when you lose. We all know the feeling. I may have been the ACTION PRESIDENT at the time, but I am not an attorney— I can’t think up these cases. However, I can support them— and I supported every one.

We at ACTION have been blessed with the participation of 2 fine attorneys working with us. Our current President, Gordon Gitlen, and Rosario Perry have been working for all Santa Monica owners for many, many years.

A plan was formulated to sue the City and the Rent Board a “piece at a time.” Approximately 7 lawsuits were brought and filed against the City and Rent Board. The theory being, “If we throw enough mud on the wall, some of it will stick.” I immediately volunteered to be a plaintiff along with ACTION. I would gladly be a plaintiff in all lawsuits filed against the Rent Board.

One of our suits was regarding interest all owners were required to pay on Security Deposits. We did not do well at the local level, and we appealed. The Appellate Court felt vastly different than the local judge in downtown LA Superior Court. When we proved that we were required to pay 3% interest on our Security Deposits when we were receiving less than 1% interest in our bank accounts— the judges remarked— “A SMALL TAKING IS STILL A TAKING.” And so we won a major victory against the City of Santa Monica. The City took it as far as the State Supreme Court—to no avail.

We now have no interest to pay on Security Deposits for the immediate future, and the judge awarded attorneys fees of $188,216.

After we won, you may recall that I was depositioned. They really wanted data— and I provided it.

I was called upon by David Petit, the Attorney for the Rent Board to be depositioned. It took me an entire weekend to gather up the required data. I was given only 3 business days to prepare. The rent board was determined not to pay a dime to anyone. I was determined to be prepared for the questioning.

I was to produce the following:

1. All WAM articles that I had written during the 10 years of publication. (Mr. Petit felt I was preparing to write a book)
2. All form 1099’s I gave to my tenants from 1999, 2000, and 2001. (Can you produce your 1099’s? I’m sure they felt I could not do it)
3. All documents showing interest that I paid to tenants for the prior 3 years. (That meant checks, etc.)
4. All my accounts where I deposit funds. (That means 3 years of bank statements)
5. All the interest I earned and the rate of interest I received for those 3 years.
6. All leases I prepared with my tenants since 1999.
7. All rent increase notices I gave to tenants since 1999.
8. All documents indicating MAR’s for each unit I own.
9. All documents relating to the move-in’s and move-out dates of tenants.

He asked me if I personally was prepared to pay the expense of contacting all the owners and the cost of the class-action suit. I said, “bring it on.”

Well, we passed with flying colors. The rent board lost big, and I could not be more proud of my small role in this entire matter. This is especially true when I know how this payment would reverberate through City Hall. They hate you— they hate me. That is a fact.

DO YOU THINK THE CITY FATHERS ARE UPSET? They are so upset, they can’t see straight. There has never been a Rent Control Case that the City lost that cost them $188,216 in the history of Rent Control in Santa Monica. And remember, this case was brought by those dreaded owners!

We are delighted to tell you about it!

ACTION still has 2 cases working their way though the courts.

WE ARE STILL BUILDING OUR HOME

April 15, 2003 was one year that we have been under construction. We are not finished yet. I am guessing that maybe we will be able to move in about Labor Day. When you do things in Santa Monica, it does not move rapidly. It took about 2 years to get through the City and its maze of red tape. Now before we finish, we are looking at three obstacles that must be overcome.

1. The City held me up for a $15,000 deposit. We were to recycle the demolition materials. OK, we did that. I did not know that I was to recycle every extra piece of wood remaining from the job. We were to recycle every piece of stucco lying on the ground from the job. You have to take it to the City’s Dump and pay $60 per ton. This is highway robbery. What should cost $400 or $500 to dispose of costs you $3,000 at the city yard. In addition, we need sworn statements and testimonials from all contractors that the materials were recycled. In other words, it will be a snowy day in hell before they return my $15,000 deposit to me.

2. We have to build 4 wells on the property. In other words, no rainwater must escape from the property during a storm. Can’t have that water going in the Bay.

Never mind that the water in these wells might undermine the foundation, we must have them. If you put them in and then take them out, you are subject to an outrageous fine—Something like $1,000 daily. The city comes once a year to inspect these wells.

3. We still have to pay the “in lieu” fees of about $40,000. That comes at the very end. This is the extortion fee the city is requiring me to pay or I must dedicate one of the three units to low-income housing. Otherwise, there would be a deed restriction that would reduce the value of the property upon future sale.

As I said earlier, they will do everything they can to put obstacles in your path. HOWEVER, I AM STILL THE OWNER OF THE PROPERTY. They have not yet figured out how to take it away from me. Go down Pearl Street, between 10th and 11th St. It looks good. So good the City hates me.

Thanks for reading.