Page Mill Properties Target of Lawsuit

Monday, July 28, 2008
Banks Albach
Palo Alto Daily News

After filing three lawsuits against the city of East Palo Alto this
month, Page Mill Properties is facing its own legal challenges on two
fronts - from the city and a group of tenants.

The residents, Eric Oberle, Shery Scott, Matthew Fremont and Nathan Ben
Yonatan,
all received rent increases of between 14 and 38 percent from Page Mill
and have filed a class action suit against the landlord, alleging that
Page Mill's rent hikes are illegal, meant to cause harm and an unfair
business practice.

The complaint, filed on July 15, also
alleges that Page Mill is using a "sham" ownership scheme to subvert
East Palo Alto's rent control law, which exempts buildings with four or
less units. Page Mill has transferred all such units into 17 limited
liability companies in order to dodge the ordinance, the complaint
alleges.

The firm Heller Ehrman LLP has taken on the case pro
bono and is seeking punitive and actual damages. Oberle said the suit
could represent up to 200 people.

A Page Mill Properties spokesman declined to comment on the lawsuit.

Also,
Interim City Attorney Valerie Armento is planning to file an injunction
on Page Mill's most recent round of rent increases this week in order
to freeze and challenge them in court. The new rents will take effect
Friday.

The legal counterattack coincides with the first
inklings of an organized grassroots opposition to the rent hikes. With
the help of the Stanford Law Clinic, a group of tenants ran a petition
drive Saturday to protest the rent increases, which have affected about
1,300 of Page Mill's roughly 1,650 units. Oberle, who helped organize
the drive, said about 100 tenants signed on.

"It was a great turnout," Oberle said.

The group will hold a second drive this Saturday at 1974 Euclid Ave.

Jessica
Steinberg, an attorney from the clinic, said she plans to present the
petitions to the East Palo Alto Rent Stabilization Board as soon as
possible and call for a hearing with an outside examiner. A favorable
decision could help the tenants and the city later in court, Steinberg
said.

Page Mill owns about 1,650 units in East Palo Alto and
has passed two rounds of rent hikes since late last year. The private
investment firm and the city have been battling ever since over whether
the increases are legal under East Palo Alto's Rent Stabilization
Program.

Page Mill used the maximum rents from city
calculated rent certificates for each unit, which were much higher than
the actual rents being paid, probably due to a sag in the rental market
a few years ago. The city, on the other hand, claims the landlord
should have based the increase on the actual rent being paid and
limited it to a consumer pricing index, which is usually about 3.2
percent. Both sides have found supporting language for their cases in
the city's ordinance.

 

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