In a decision welcomed as a major victory by West Hollywood landlords, a Santa Monica Superior Court judge has ordered the city's Rent Stabilization Commission to reconsider a rent-increase case involving an 87-year-old landlady.
The ruling, issued Tuesday by Judge David M. Rothman, will force the rent commission to rehear the case of Mary Simonson, who claimed that she was becoming financially destitute after retaining low rents for more than two decades in her nine-unit apartment building.
Simonson's attempt to double her rents was denied when the commission deadlocked in a 2-2 vote last May.
Rothman ruled that when the commission is determining whether a landlord is making a fair return from a rental unit, it must take into account the rents of comparable units in the surrounding area. Simonson's attorney, Christopher M. Harding, has claimed that Simonson's rents are lower than rents imposed on similar apartment units near her building.
Last May, the rent commission declined to consider any evidence of comparable rents in the Simonson case.
Simonson, who is partly deaf and in frail health, has since become an unlikely heroine to West Hollywood landlords, who financed her legal appeals.
"This is an extraordinary decision that could eventually affect rent control laws throughout the state of California," said Grafton Tanquary, an apartment-building owner and leader of West Hollywood Concerned Citizens, a landlord lobbying group.
'Not a Law Unto Themselves'
"The City Council and the rent commission are finally learning that they are not a law unto themselves," he said.
City officials minimized the impact of the ruling, saying they are prepared to incorporate the judge's ruling in the rent commission's decision process.
"We're not terribly concerned about this," said Richard Dorsey Muller, director of the city's Rent Stabilization Department.
But both Muller and City Atty. Michael Jenkins acknowledged that the city is considering an appeal of Rothman's ruling. "We'll take a close look and make a decision soon," Jenkins said.
Landlord advocates insist the ruling will have a significant effect on rent-increase requests. Tanquary claimed that up to 30% of West Hollywood's 18,000 rental units could be classified as "historically low" and may be helped by comparisons with surrounding higher-rent apartments.
"At least a third of the city's units were under county rent control--and lower than their market value--when the city passed its rent control law in 1985," Tanquary said. "We believe that many of those landlords would have a good case."
But Muller said that a recently completed a survey of rents charged by city landlords showed that fewer than 4% of the city's rental units impose "historically low" rents.
Muller added that city officials do not consider apartments to have "historically low" rents simply because they were covered by the county's rent law when the city rent law took over in 1985.
"The units that we found to charge historically low rents are a fraction of the total number of rental units," Muller said. "They are dispersed throughout the city and they are nowhere near the numbers that landlords talk about."
Whatever the numbers, city officials concede that the ruling will force some changes in the rent commission's determination of rent cases.
"The court in no way said what we have to do once we've considered comparable rents," Muller said. "We just have to make sure that it is considered."
In its ruling on the Simonson case last May, the commission upheld an earlier decision by a city hearing examiner that comparable rents were not relevant to Simonson's case.
The commission also declined to use a special provision of the city's rent law that would have allowed it to sidestep a complicated formula normally used to determine rent increases and simply award an increase to Simonson because of her hardships.
Rothman found both of the commission's decisions to be in error.
"Nothing in (West Hollywood's) rent stabilization ordinance makes evidence of comparable rents in the area irrelevant," the judge wrote.
He also said that the commission could have considered ignoring its formula and awarding a hardship rent increase to Simonson.