East Palo Alto's biggest landlord has filed a new lawsuit against the city, this time alleging that the rent stabilization board wrongfully denied 44 claims for exemption from rent control.
In documents filed last week in San Mateo County Superior Court, attorneys for Page Mill Properties challenged the East Palo Alto Rent Stabilization Board's March 11 decision to reject applications for exemption. They filed the suit on behalf of 44 limited liability corporations that Page Mill represents.
"Over the past few years, petitioners have spent millions of dollars substantially rehabilitating their properties," the suit alleges, noting that the city's rent stabilization ordinance rules exempt units from rent control that have undergone "substantial rehabilitation."
In January, Housing Services Director Wilbert Lee denied the applications for exemption, in part because most of the renovations were not structural and because the company refused to submit its requests on city forms and provide all required information, Interim City Attorney Valerie Armento said Friday. Cosmetic changes and any work that a landlord could claim in tax filings do not qualify as substantial rehabilitation.
In addition, the company failed to get the necessary approval from the rent stabilization board before completing the work, Armento said.
Page Mill later appealed Lee's decision to the rent board, resulting in the March 11 ruling. Armento said the latest lawsuit was part of Page Mill's "multi-pronged attack against the city's rent stabilization program in its entirety.
"They have done some work in the area where they own units, and they're trying to pull those units out of the program," she said.
Page Mill countered that the city's forms requested unnecessary information and that there were no clear rules about how to get pre-approval for the renovations.
"Once again, we must go to court to explain the clear meaning of the plain language of the East Palo Alto's rent control ordinance," said Page Mill General Counsel Jim Shore in a statement Friday. "As in the past, EPA's rent stabilization board has failed to understand its own ordinance.
"The courts have rejected East Palo Alto's interpretation of its ordinance in the past, and we expect to prevail in court again on this lawsuit," he continued.
East Palo Alto and Page Mill are engaged in a bitter legal dispute over rent hikes at many of the 1,700 to 1,800 rental units the company owns in the city of 32,000.
The city is involved in about 10 active lawsuits with the company and has spent an estimated $300,000 on its own attorney fees, Armento said. Last week, the city council approved adding $14,000 to the rent stabilization hearing examiner's budget to cover cases related to Page Mill.
Earlier this month, San Mateo County Superior Court Judge Beth Labson Freeman ordered the city to pay Page Mill $472,062 for attorney's fees after losing two court judgments. Page Mill originally requested $731,778 in compensation.
"Based upon the clear and unambiguous language of the ordinance, the court finds that Page Mill is entitled to recover the attorneys' fees," said Freeman, noting that the company's attorneys charged reasonable hourly rates.
Nonetheless, she added that "the court is struck by the unreasonable number of issues raised without any likely success, and the court is somewhat amazed by the overall number of hours devoted to prosecuting this case."
No court has examined each certificate in question or ruled on whether the individual rent hikes were legal.
"The certified rent ceiling is binding and conclusive, absent fraud or intentional misrepresentation," Freeman said in a November ruling.
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