In a legal action that officials say is intended to send a message to landlords throughout the city, Santa Monica has accused an apartment owner of skirting rent control laws by charging his tenants "exorbitant and unlawful" fees for amenities.
City attorneys made the charges in a lawsuit filed in Santa Monica Superior Court on Thursday. The suit seeks restitution for the tenants and $125,000 in civil penalties against Michael Millman, a West Los Angeles attorney who owns a 12-unit building on Montana Avenue.
Millman denied the city's charges and said he is complying with rent control laws.
Paying Extra for Amenities
The suit alleges that Millman coerced his tenants into signing "separate amenities agreements" whereby they would pay extra for stoves, blinds, garbage disposals and other features. Millman would not rent the unit to the prospective tenants unless they signed the agreement, the suit alleges.
Under Santa Monica law, a landlord may charge extra for special amenities only when the agreement is voluntary, when the amenities are clearly optional and when the extra payment is "truly separate" from what the tenant pays as rent, according to Santa Monica's consumer affairs attorney, Jeffrey W. Holtzman.
Holtzman said Millman, wrapping in the amenities, was charging his tenants an average of $750 a month, when the maximum allowable rent under the city's law for apartments in the Montana Avenue area is $211 to $400.
"It is patently absurd to believe that someone is (voluntarily) entering into an agreement to pay an extra $400 a month for mini-blinds," Holtzman said.
He said Millman tells prospective tenants that if they do not accept the agreement, plenty of other tenants will. And because Montana is a choice location and apartments in Santa Monica are tough to come by, the argument apparently works.
'Want to Make an Example'
"It's an ongoing scam in Santa Monica, a way to get around rent control," Holtzman said. "We want to make an example of him."
Millman charged that the city is trying to intimidate him because he is currently suing three of his tenants.
"I think there is no merit to (the lawsuit) whatsoever," Millman said. "Every claim, when it is examined by the court, will be thrown out. It's like Alice peering through the looking-glass."
Millman said the city was trying to retroactively apply guidelines on separate amenities agreements that were not published until late last year. Even so, he said he was confident that the agreements he signed with his tenants will hold up under the guidelines.
Millman, who purchased the building in March of last year, said he researched whether he could charge extra for the amenities and "received assurances" from rent-control experts that his procedures were lawful.
He denied that had coerced any tenant into signing the agreement.
"I was creative to find a way to provide a luxury apartment and still comply with the rent control law," Millman said. "They're gorgeous apartments and people wanted them."
The suit further alleges that Millman is "harassing, annoying and otherwise retaliating" against tenants who reported him. Millman denied the charge.
Holtzman said Millman's alleged practices are not uncommon among landlords in Santa Monica, adding they subvert rent control.
"By charging double the rent, you're depriving those tenants who would be qualified (for a rent-controlled apartment)," Holtzman said. "By subverting the intent of rent control, the landlord is putting these apartments out of the reach of anybody but yuppies. Someone who can't afford it is being deprived of the benefits of rent control."