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Apartment Owners Sue City Over Leasing Requirements

Bob Kronovetrealty
We Love Property Management Headaches!

Santa Monica

Santa Monica Apartments

Santa Monica College
1900 Pico Boulevard
Santa Monica, CA 90405
(310) 434-4000


By Jorge Casuso

December 16, 2020 -- The owners of 32 apartment buildings and projects in Santa Monica filed a lawsuit in federal court Monday challenging the City's new restrictions on residential leases.

The ordinance adopted September 8 -- which requires leases to be at least one year -- violates the constitutional rights of both landlords and tenants, the plaintiffs' attorneys said.

In addition to limiting the length of a lease, the law requires that a unit be rented unfurnished and that tenants provide documentation proving the unit will be their primary residence.

The lawsuit charges that the law -- which is "hasty, ill-conceived, and short-sighted" -- constitutes a "taking of private property without just compensation."

It also violates "equal protection, due process and freedom of movement rights," the attorneys said.

The ordinance "profoundly and unlawfully disrupts the City’s rental housing market" and "impacts those especially in need of flexible housing options," they said.

NMS and WS Communities -- the housing providers that own the 32 properties, most of them Downtown -- contend that the ordinance upends their business model.

"These buildings and projects rely on a business model that allows for flexible-term leasing and furnished rentals," the lawsuit states.

"Their tenants are people who want or need to live in Santa Monica, and for whom flexibility in the lease term is critical."

The plaintiffs' attorneys contend that "the Santa Monica City Council’s violations are so severe in scope and duration as to subject the City to damages amounting to hundreds of millions of dollars."

In a statement sent to The Lookout Tuesday, the City said it believes the ordinance's regulations are legally valid.

"Santa Monica has a successful record adopting balanced housing policies that protect limited housing for long-term residents," the statement said.

"In keeping with this, the City Council passed new residential leasing regulations earlier this year."

After receiving numerous complaints, the Council amended the ordinance in October to eliminate unforeseen scenarios ("City Council Amends New Rental Housing Law," October 15, 2020).

The lawsuit charges that the City Council abruptly shifted course at its August 25 meeting and rejected staff's recommendation "that landlords be required to offer -- and tenants be free to decline -- annual leases and furnished apartment options.

"But for purely political reasons and without the benefit of any study, the City Council completely changed course in the middle of a meeting," the lawsuit states.

The sudden change came "after hotel lobbyists and other political activists demanded that anyone needing a home in Santa Monica for less than a year go to an 'extended stay hotel.'”

According to the lawsuit, "The City Council politicians simply decided on the fly that they know better than their staffers: one size would have to fit all, no matter the circumstances."

The lawsuit, which demands a jury trial, comes after the plaintiffs filed a writ of mandate in state court December 5 to reverse the Council’s decision.

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