The Santa Monica Rent Control Board obtained a vital court ruling on Aug. 13 that preserves greatly-needed affordable rental housing.
The lawsuit — brought by attorney Rosario Perry on behalf of property owners Deborah and Robert Sidenberg — aimed to invalidate a 1994 contract between the Board and the Sidenbergs’ parents that required two units on their 10-unit property be continuously rented to low-income households.
The new owners wanted to charge market rents on the units their parents had agreed to maintain as affordable to low-income tenants.
“Far too many units lose their affordability to low-income households when the current tenants move out,” said Todd Flora, Chair of the Rent Control Board. “The Board’s victory in this case means that these two units will be preserved for those who need them most, and sends a clear message that close to 200 controlled units subject tosimilar contracts will remain protected and affordable.”
The contract in this case was entered into in the wake of the Northridge earthquake.
To offset the costs of necessary earthquake-related repairs to the property, the Board allowed the then-owners to re-rent eight of the 10 repaired units at market rate. At that time, landlords did not have the right to reset rents to market rates after a vacancy because the Costa-Hawkins law had not yet been passed.
In exchange for these benefits, the owners agreed to maintain two units in their building as permanently affordable to low-income households.
The Sidenbergs claimed that although their parents entered into a valid contract with the Board in 1994, the Sidenbergs (after inheriting the property) shouldn’t have to honor the agreement now because the Costa-Hawkins Rental Housing Act allows owners to set the initial rents for any vacated unit.
That law, they claimed, allows them to set the rents at any amount regardless of the existing contract. They pressed these claims despite the statute’s plain statement that it does not invalidate contracts entered into prior to its enactment on January 1, 1996.
The Board defended the suit for two years on the ground that Costa-Hawkins does not invalidate contractual obligations entered into prior to the law’s enactment.
Ultimately, the court agreed with the Board and upheld the contract. The court’s ruling makes clear that pre-1996 contracts containing rent limitations remain valid after the passage of the Costa-Hawkins Act.
