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Legal Column, September 2003
By Rosario Perry, Esq.

OUTRAGEOUS GOINGS ON AROUND TOWN

Look Homeward, Angel

Is our city by the sea heading into ruin and bankruptcy? Historic readers of this column will note that we have been harping for well over three years on the economic dangers our city has been facing in its out of control spending spree. The city has without any real concern for a balanced budget, spent the following sums of money in one continuous drunken spree: First, $68 million on the new Police and Fire Office Buildings. Now, the voters had rejected a bond proposition for $25 million for the very same building, so the City Council (SMRR) decided on spending $68 million in direct contradiction to the will of the people. Second, $72 million on a new and totally unneeded public library to be located at 6th and Santa Monica Blvd. (the building will hold only about 1/6th more books than the old building did). The voters had approved a bond proposition for 23 million for repairs, but the City Council would have none of that, and decided on total demolition at the outrageously large amount of 72 million. Third, $53 million for the Rand Land (what ever SMRR will make out of it, the purchase was way overpriced, and Rand could not sell it to anyone else for well over 3 years of looking). Fourth, millions each year to Community Corp and their low income housing projects, most of which are located on the most expensive land in our City. If all that was not enough, the City is now facing an estimated $30 million in liability for the tragic deaths and injuries at the 4th Street outdoor market traffic accident. The City, with all its worrying and over regulation of the most minutia of life (i.e. permits to change water heaters, or to change kitchen sinks, or to paint one’s home, or repair a hole in the drywall, etc., absolutely stupid and bureaucratic stuff) has not taken the time to look homeward into what its own problems are. That lapse in judgment, that “better than thou” personae will cost this city not only the shame of the deaths and injuries of those poor people at the open air market, but the economic liability consequences of millions of dollars paid out to compensate those killed or injured. Of all the failures of this perfect bureaucracy of a City, this was its worst. This City, which takes pride in sending out armed police officers to stop some poor soul, who heaven forbids, starts working on a construction project 10 minutes too early in the morning, this same City cannot take the time to review its own projects for safety. Our city is a city of hypocrisy by no small means. It is a city which has earned such a poor reputation among neighboring residents for its intolerance, ignorance, political hacks, selfish polices directed only to keeping SMRR in power, and all the like, that it will have no credibility whatsoever come judgment day. That judgment day for the City will be the day of trial on the open air market lawsuits. It is our guess that all lawsuits will be consolidated for one trial, and the jury or juries will compete against themselves to award the largest amounts of money that anger can buy. But where are the rest of us, those of us who do not support the city policies which have made us such an object of ridicule and disgust? Well, we will be harmed along with the rest. Our failure is that we did not do more to wake up the sleeping and unaffected residents of our city to vote for relief from SMRR’s intolerable, always overburdening, blanketed, and smothering control of city hall. It is our fault for not standing up to the city’s ridiculous planning and building rules and regulations (nothing but attempts to stop or delay anything new being built in our city). But all this will come back to haunt and terrorize us soon. The Wall Street Bond Market, far removed from any influence of SMRR, will start running down our City’s credit ratings, and the interest on our city bonds will start to rise. This will require more and more of our city budget to be allocated for bond interest payments. If the city tries to raise taxes there will be a revolt, all city services will suffer from a real lack of funding, due to more and more money being siphoned off to pay ever increasing interest payments on city loans, and all will whirlpool into a financial mess. While we are not all villains in this tragedy, we are all to blame.

UPDATE ON RECENT STATE BILLS
OF INTEREST AS OF AUGUST 3, 2003

There is some good news on the horizon, in that many of the anti-housing provider bills introduced this year into the state legislature have not been brought forward into law. As we reported last edition, the State legislature has declared war on the state’s Housing Providers. There have been a series of bills introduced by certain legislators, which if passed into law (effective January 1, 2004) will make owning and operating an apartment building that more difficult. Lets follow their progress from last time reported. AB = Assembly Bill and SB = Senate Bill. Here we go:

AB 831 (Goldberg): Unlawful Detainer
This bill is an extremely complicated one. It extends the time to answer an unlawful detainer complaint from 5 days to 10 days in certain situations, plus other amendments making it more difficult to evict tenants. As of August 6, 2003 (at the third reading) the measure failed to gain needed support in the Assembly and Goldberg has tabled further deliberations.

AB 1059 (Lieber): Retaliatory Eviction, Punitive Damages
This bill increases penalties assessed against Housing Provider from $1,000 to $2,000 for retaliatory eviction or threats made to tenants. As of July 27, 2003 this bill was seriously amended, and the Judicial Committee of the Assembly has refused to allow a vote on it, holding up its passage as a law. Ironically enough, the bill was amended to exclude from threats, and oral or written notice to cure. This is the topic of ACTION’s lawsuit against the City of Santa Monica’s tenant harassment law, that it is an unconstitutional violation of the housing provider’s First Amendment rights to make the service of a 3-day notice to cure or quit a threat punishable by the City’s laws.

AB1217 (Leno): Relocation Benefits
This bill has been amended since last we spoke, and as it reads now, it allows Cities to prohibit the Ellising of guest rooms or efficiency units within a residential hotel, if the City has more than 1,000,000 population, and no Ellis as been filed prior to January 1, 2004.

AB 1256 (Koretz): Rent Control
This bill would abolish the Costa-Hawkins Act, and place under rent control all buildings built after 1979, as well as buildings built before 1979. This bill was referred to committee on March 17, 2003 and has had no action since that time. It appears that this bill will not move forward.

AB 1384 (Maddox): Pre-termination Inspection
Clarifies existing law which requires a landlord to notify a tenant of his or her right to request an initial inspection of the rental unit prior to terminating a tenancy by providing that a landlord is NOT required to give such a notice or perform the inspection when the landlord has served on the tenant a 3-day notice to cure or quit or 3-day notice to quit. This bill passed the Assembly and is now in the Senate, and is going to its third reading. It may very well pass.

AB1361 (McCarthy): Non-Residential Security Deposits
Non-residential security deposit refund within 30 days, not two weeks. This bill has passed and is now the law.

SB 90 (Torlakson): Residential Security Deposit Refund
This bill requires a Housing Provider to include in the statement of deductions from security deposit, the actual receipts for the repair work that Housing Provider has deducted from the security deposit. This bill would revise these provisions to require a landlord to include a receipt for any labor or material the landlord has paid for and has deducted from the security. If the receipt lacks certain information about the person or entity providing the labor or material, the landlord would be required to provide Tenant that information. If the Housing Provider cannot do the repair work within 21 days, then the Housing Provider has 14 days after the work is completed to send the supporting bills and invoices. This bill passed the Senate in April 2003 and was sent to the Assembly, and has had its 3rd reading there. It appears likely to pass, but it will be a bookkeeping nightmare for Housing Providers.

SB 178 (Cedillo): Rent Control
This bill would specify that Costa-Hawkins, does not prohibit cities from (1) requiring low income deed restricted units to be built and (2) to enforce rent controls on new units built (but not on rehabilitated units) pursuant to the cities inclusionary zoning requirements. To impose these limitations, cities must offer specified incentives or concessions as set forth in Government Code Section 65915. This bill is a major change to Costa-Hawkins, and probably will result in unforeseen results of much higher density in cities, and fewer new construction projects being built. This bill passed Senate on June 4, 2003 and was sent to the Assembly where it has had its third reading. It appears that it will pass.

SB 345 (Kuehl): Amend-ment to Costa-Hawkins and other Landlord-tenant Related Laws
What started out as Ms. Kuehl’s full on attack against Housing Providers, has been amended into a much less burdensome piece of legislation. First, the most horrible portions of this bill have been deleted. Gone is the 5 year freeze on rents for owner occupancy terminations starting January 1, 2004, Gone is the blocking of access to the UD lawsuit registry for 60 days after judgment is entered against the tenant. However, it is replaced with a provision which states that if the Tenant wins the UD lawsuit within 60 days of the filing of the complaint, then the UD is sealed and not available for inspection by the UD registry. This prevents anyone from learning that a tenant was involved in a UD lawsuit if the tenant wins. Gone (mostly) are the requirements that certain documents be attached to a UD complaint. Now, the only thing which must be attached is the notice of termination of tenancy and the written rental agreement, if there is one. Gone is the right of a tenant to pay rent due as late as the beginning of the UD trial. The bill does not address this topic at all, so the current law is that the tenant only has 3 days from the service of the 3- day notice to pay rent, and if he does not Housing Provider may evict. All in all, many associations worked very hard to amend this bill.

INTEREST ON SECURITY DEPOSIT LAWSUITS

ACTION has been involved in litigation over the correct amount of interest that a city may require the Housing Provider to pay on tenants’ security deposits that the Housing Provider holds. ACTION has sued the Cities of Los Angeles, Santa Monica, and West Hollywood. The Los Angeles case was settled out of court, and the City has agreed to forgo interest collection altogether for the calendar year 2002. This settlement was to allow Housing Provider to make up for the overpayment of interest they were required to pay to their tenants. In addition, the settlement requires the City of Los Angeles to always allow the Housing Provider to pay no more interest than the Housing Provider earns from his or her bank. Thus in the future, there will not be a situation where Housing Providers are required to over pay earned interest again. The Santa Monica Rent Control Board also settled but they litigated for over 3 years before they did. The settlement here was that they would give Housing Providers 3 years free interest on security deposits (from Jan. 1, 2002 through December 31, 2004) and thereafter any regulation they might pass would also allow Housing Provider to pay no more interest than the Housing Provider earned from his or her bank. Finally, the City of West Hollywood is still in litigation with ACTION. The City has filled a motion for summary judgment against ACTION, and the hearing is coming up in late August 2003. Hopefully we will beat this motion and be able to proceed to trial on this case. We are seeking monetary damages to be reimbursed to Housing Providers to make up for the over payments they have made. In settling the Santa Monica case, the court awarded almost $200,000 to ACTION for attorney’s fees and costs resulting from the litigation. This award was very huge for ACTION, in that it hopefully promotes more attorneys to take up the cause against over regulations and oppressive governments everywhere.