In an unexpected legal action, West Hollywood's largest landlord group this week obtained a temporary restraining order blocking the city from collecting $900,000 from landlords by doubling a fee used to fund its Rent Stabilization Commission.
West Hollywood Concerned Citizens, which represents about 1,000 landlords citywide, argued in Santa Monica Superior Court on Wednesday that the city violated its own Municipal Code when it approved a rental registration fee increase July 17, and that the increase infringes upon landlords' rights to a fair economic return on their investments, a basic principle of state rent control law.
Santa Monica Superior Court Judge Jacqueline Weisberg issued the order and set a court hearing date for Sept. 13. West Hollywood, complying with the court order, ceased accepting landlords' payments of the fee increase Thursday, but is not required to return payments made before that time.
Grafton Tanquary, leader of the landlord group, accused the city of ignoring landlords' concerns over this issue and called the fee increase "illegal and grossly unfair."
"When you talk to people and you say, 'Listen, we're opposed to this, we don't think it's fair, or honest, or legal,' and they ignore you, what are we going to do?" Tanquary said. "Our only recourse is to the courts."
City officials dismissed the landlords' suit.
"I think that all the arguments totally lack merit," said Assistant City Atty. Carol M. Lynch.
The landlords' attorney, Craig Mordoh of Santa Monica, "totally misunderstood the ordinances that were adopted," Lynch said, adding that she was surprised and disappointed that the issue had gone to court.
The dispute stems from West Hollywood's decision in July to double an annual rent registration fee from $48 to $96 per unit. Since the city's rent control law was passed in 1985, the $48 fee has been assessed each September to landlords, who then could pass the expense to renters at $4 per month.
Under the new system, the city will still bill landlords for the entire fee but prohibits the additional $48 from being passed to tenants in the city's 18,000 rental units.
City officials authorized the fee hike to fund the Rent Stabilization Department, which last year relied on the city's general fund for 51% of its budget.