Sunday, July 03, 2016

Los Angeles City Attorney Files Six Criminal Misdemeanor Charges Against Landlord Accused Of Invoking State's Ellis Act To Illegally Boot Rent-Controlled Tenants Out Of 4-Unit Building, Then Peddling 'Short-Stay' Rentals Thru Airbnb

In Los Angeles, California, the Los Angeles Times reports:
  • After years of watching the supply of affordable housing plummet, evictions and demolitions surge and landlords score quick profits with short-term rentals, Los Angeles officials are striking back.

    For the first time, the city attorney’s office has filed criminal charges alleging that a building’s owners offered units for rent on Airbnb after booting out tenants, officials said [recently].

    The misdemeanor charges, along with civil suits filed against the owners of three other buildings, are intended to send a signal to other landlords breaking city rent control laws as L.A. confronts an affordable-housing crisis.

    “Given that shortage of affordable housing, illegally converting rental units to hotels or short-rentals has got to stop,” City Atty. Mike Feuer said at a news conference Monday. “My office is going to intervene to preserve rent-stabilized units and restore those units when we allege they’ve been unlawfully taken off the market.”

    It’s unknown how many illegal short-term rentals are operating in L.A., but Feuer said his office has made it a priority to investigate such complaints.

    Carol J. Alsman and LSJB Investments LLC, who own a four-unit building at 500 N. Genesee Ave. in the Fairfax district, were charged last week with six misdemeanor counts of violating city zoning, building code and rent-control laws.

    The complaint alleges that they evicted tenants under the Ellis Act, a state law that allows landlords to get out of the rental business. The law requires landlords to pay for relocation fees and notify tenants if they intend to re-rent the units within five years.

    The owners later rented those units for more than $550 a night through Airbnb and failed to allow former tenants an opportunity to re-rent those units, the complaint alleges.

    “Obviously there is a great profit to be made if you could, on your whim, change your apartment unit into a nightly hotel rental,” Feuer said.

    The cases underscore the depths of the city’s housing crisis. More than 1,000 rent-controlled apartments in the city were removed from the market last year — a nearly threefold increase since 2013, an analysis of housing data found earlier this year. Evictions from such units have doubled over the same time.

    Across L.A., more than 20,000 rent-controlled units have been taken off the market since 2001, city records show.

    Tenant advocates say the removal of such units has hurt the supply of affordable housing at a time when L.A. has become one of the least affordable cities in the country.

    Three evicted tenants sued the owners of the Genesee building last year after they noticed their units listed on Airbnb weeks after they moved out. The civil case is still pending.
    Tenants in rent-controlled buildings have strong protections against eviction to ensure landlords can't kick them out to charge higher market rents.

    But under the Ellis Act, passed in 1985, landlords are able to evict tenants if they intend to either take the housing off the rental market or demolish the building to put up new apartments.

    The practice has sparked a backlash in Los Angeles and San Francisco. Efforts in recent years by state legislators to amend the law failed amid opposition from the real estate industry.

    The San Francisco city attorney’s office in 2014 filed civil suits against owners of two rent-controlled properties for evicting tenants and illegally converting them to short-term rentals. The landlords settled last year for nearly $400,000, according to the city attorney’s office.

    On Monday, Feuer also filed civil suits against the owners of three rent-controlled apartment buildings, alleging that the property owners are illegally operating and advertising them as hotels.

    They include two properties on Ocean Front Walk in Venice and one on North Van Ness Avenue in Hollywood. The three buildings have more than 120 units, according to the city attorney’s office.

    The lawsuits seek a court-appointed receiver to operate the three properties until they are brought into compliance, as well as restitution and civil penalties.

    Renting out apartments or houses for short stays is illegal in many residential areas, according to city planning officials. The housing department received dozens of complaints about "illegal usage" of apartment buildings last year, officials said.

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