A plan that would substantially alter Santa Monica's rent control law by allowing landlords to raise rents when apartment units are vacated was placed on the June ballot this week, one day after a tenant organization sued to have the measure declared invalid.
The City Council approved the plan, called the Tenant Incentive Program, for the ballot Tuesday night. The action was a formality, because supporters had gathered enough signatures to force an election.
In a brief session, the council also allocated the $40,000 needed to fund the special June 3 vote, which will be consolidated with the county election. Councilmen Dennis Zane and James P. Conn did not attend the meeting.
The Tenant Incentive Program is being promoted by the Santa Monica landlord organization known as ACTION (A Commitment to Insure Owners' Needs).
Supporters have said that a landlord would be obligated to share his profits with his remaining tenants under the program. But in a recent legal opinion, City Atty. Robert M. Myers concluded that the plan offered nothing to renters because of a "major drafting error."
"As written," Myers said in the report, "the measure technically provides that no existing tenants would receive payments under the Tenant Incentive Program." He also said the program was fraught with implementation problems. Organizers have said the Rent Control Board would administer the program, but Meyers said the proposal may actually exclude the board from becoming involved.
Myers' report is the basis of the lawsuit filed by Santa Monicans for Renters' Rights, the organization that created the city's stringent rent control law. In the action filed in Santa Monica Superior Court on Monday, the organization charged that the Tenant Incentive Program is fraudulent.
"The (measure) doesn't really provide what they say it will provide," said attorney Roger Diamond, speaking at a City Hall press conference. "This is not a technicality. . . . This is a substantial issue."
The case will be heard on March 18. Diamond said he will ask the court to remove the Tenant Incentive Program from the ballot on the grounds that the legal language contained in the measure is incorrect and misleading.
"The people signing this didn't know the context in which this one little amendment fit into the entire (rent control) scheme," Diamond said, "and they didn't know what part of it would be the law."
Geoffrey S. Strand, a spokesman for the Tenant Incentive Program, said he was "delighted" by the lawsuit because it gives the landlord's organization an opportunity to defend the measure in court. Strand charged that criticism of the program is politically motivated.
"We feel that they have made a major blunder," Strand said. "It is clear that the tenants in Santa Monica will receive a large cash windfall (from the program). . . . We think the suit will help us immeasurably."
The apartment owner group first proposed the Tenant Incentive Program last year. Rent levels are set by the city's Rent Control Board. But the Tenant Incentive program would permit a landlord to establish a "new base rent" each time a tenant moved.
Promoters of the plan have said that the an apartment owner would share the profits from the rent increase with the remaining "qualified tenants" by multiplying the amount of one month's rent increase by 10 and dispersing the sum among the building's "qualified units."
For example, a landlord who raised the rent on an apartment by $400 a month would divide $4,000 among his tenants one time, according to the landlords. An apartment owner would not be allowed to raise his rent if the vacancy was the result of an unfair eviction as determined by the city's Rent Control Board and the unit would be recontrolled once the rent had been raised.
Two supporters of the Tenant Incentive Program addressed the City Council Tuesday night. John Jurenka and Jim Jacobson both argued that apartments would continue to be protected by rent control regulations under the plan. They said the program simply establishes a "new rent ceiling" for apartments.
The plan is opposed by the entire City Council and Rent Control Board. Mayor Christine E. Reed and Councilman Alan Katz will write the ballot argument against the Tenant Incentive Program. Supporters will be allowed to write the argument in favor of the plan.