Hearing Examiner Rules for 136 Tenants against East Palo Alto Landlord

Wednesday, May 20, 2009
Jessica Bernstein Wax
San Jose Mercury News

A
hearing examiner has issued a general ruling in favor of 136 tenants
who allege East Palo Alto's biggest landlord violated local rent
control laws by overcharging them.

Hearing Examiner Peter
Labrador mailed the document earlier this month to the Stanford
Community Law Clinic, which is representing the tenants, and Woodland
Park Management, part of Palo-Alto based Page Mill Properties.

No examiner or judge has ruled on the individual cases, and Page Mill officials said they would appeal Labrador's decision.

Nonetheless,
Jessica Steinberg, a supervising attorney with the Stanford clinic who
worked with law students on the case, called the ruling "a significant
victory."

"For me, it was an unambiguous declaration that the
rent increases are unlawful," Steinberg said Tuesday. "He ruled for our
clients on every point."

The base rent for those units that fall
under a 1995 state law known as the Costa-Hawkins Rental Housing Act
re-sets every time one tenant moves out and another moves in, Labrador
said in his ruling. The new tenant then must pay set yearly increases
on that original rent.

Attorneys for Page Mill had argued that
if a landlord charged a new tenant less than the maximum allowable rent
printed on certificates the city updates yearly, the base rent wasn't
equal to the new tenant's initial rent because Costa-Hawkins didn't
apply, according to the document.

"Neither Costa-Hawkins nor the case law supports respondents' position," Labrador
wrote. "Costa-Hawkins permits landlords to impose whatever rent they
choose at the commencement of a tenancy. The initial rental rate can be
whatever the market will bear."

Labrador also ruled that the
maximum rents printed on certificates were not binding if those numbers
were based on fraud or deceit. In some cases, Woodland Park and Page
Mill failed to submit forms when a new tenant moved in, possibly
constituting "a fraud committed on the (rent) board," he said.

"The
Rent Stabilization Board issued certificates of maximum legal rent
violative of Costa-Hawkins as a result of the failure of the respondent
(Woodland Park) to disclose information it was required to report under
the rent stabilization ordinance," Labrador wrote.

Page Mill General Counsel Jim Shore vehemently disagreed with that statement.

"There
has been absolutely no evidence presented in any proceeding, including
this one, that Woodland Park Management or any other party to that
proceeding ever committed fraud or failed to disclose required
information," Shore said in a statement.

"Mr. Labrador's ruling
is contrary to the decision of the Superior Court in the cases decided
earlier this year," Shore added. "It is also in conflict with the local
rent stabilization ordinance as well as the relevant provisions of
state law. We intend to appeal the ruling."

Page Mill and the city of East Palo Alto are currently involved in about 10 lawsuits over rent hikes and other issues.

Much
of the dispute centers on whether Page Mill correctly raised rents to
match the legal maximum that appeared on certificates kept by the city.
In many instances, those amounts were hundreds of dollars more than
what tenants were actually paying when the company bought more than
1,700 units in the city of 32,000.

Steinberg said both parties
are working with the city and rent board to determine how the case
should move forward. It remains unclear whether the rent board will
hear Page Mill's appeal before individual cases are reviewed, or
whether the parties will come to some other agreement, Steinberg said.

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