Tenant Group Calls for East Palo Alto to Replace City Manager for Interference with Rent Stabilization Program

Wednesday, July 9, 2014
Tenants Together

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FOR IMMEDIATE RELEASE                        Contact: Dean Preston

July 9, 2014                                                     415.495.8100 ext. 1001

Tenants Together is calling for the replacement of East Palo Alto's City Manager based on a comprehensive review of documents obtained through a Public Records Act request from the City of East Palo Alto. The request included a demand for all communications to or from City Manager Magda Gonzalez concerning the Rent Stabilization Program. Tenants Together reviewed over 3,000 pages of documents produced pursuant to the request. The City Manager's contract expires in October 2014, and it is the City Council's decision whether to replace her or renew the contract.

The documents reveal that the City Manager has effectively given control over the regulatory process to the biggest landlord in East Palo Alto. Responding to complaints from Equity Residential (EQR), the city's largest landlord, the City Manager interfered with enforcement of the Rent Stabilization Ordinance (RSO). Whether motivated by bias or incompetence, the City Manager allowed her office to be used by EQR as a tool to impose its will and override the efforts of the Rent Stabilization Administrator to enforce the RSO. EQR acknowledged her efforts in an email thanking her for her "continued support."

"We are alarmed by the situation in East Palo Alto," commented Dean Preston, Executive Director of Tenants Together. "Most of the rental properties in EPA are consolidated in the hands of one mega-landlord, Equity Residential, a corporation headed by anti-rent control zealot Sam Zell. As if that weren't bad enough, this landlord has undue influence over a City Manager who apparently believes that her job, and that of the Rent Stabilization Program Administrator, is to coddle EPA's biggest landlord rather than protect the city's tenants. The future of rent control in East Palo Alto is at stake."

According to the Rent Stabilization Ordinance, its purpose "is to protect residential tenants in the city from unreasonable rent increases, to discourage speculation in rental property, to protect tenants from arbitrary, discriminatory or retaliatory evictions and to assure landlords the right to a fair return. " Rather than further the protective purposes of the RSO, the City Manager goes out of her way to accommodate the concerns of the primary entity regulated by the ordinance, Equity Residential. The documents reveal that the City Manager directed the Rent Stabilization Program Administrator to refrain from assisting tenants with referrals to city inspectors to address substandard living conditions.

The documents also lift the curtain on the controversial "review" commissioned by the City Manager. Although promoted as an independent review, the resulting document reads more as a hit piece on the Rent Stabilization Program and its administrator, Carol Lamont. Lamont resigned in protest after being presented with the report. The public records show that no tenants (except a member of the rent board) were interviewed in preparing the review, while two of EPA's biggest landlords were the only landlords interviewed, both of whom had been accused of violating the ordinance and were known to be dissatisfied with enforcement efforts. The report's author in an email to the City Manager admitted lacking expertise on the Rent Stabilization Ordinance and its regulations. Rather than bringing in someone with the necessary expertise, the City Manager pressed forward with the report critical of the program's operation and the perceived (by the two landlords interviewed) bias of the Program Administrator. In an email to the author, City Manager Gonzalez said she was "pleased with the report."

Analysis of Documents Produced By City of East Palo Alto

Rent Stabilization Administrator Directed Not to Assist Tenants

The PRA request uncovered irrefutable evidence that Gonzalez directed the Rent Board Program Administrator not to assist tenants with referrals to city inspectors. In emails on May 30 and 31, 2013, Gonzalez informed Lamont, "We need to make sure not to do this, so I want to make sure you understand and are not referring people to have an inspection done." Gonzalez refused Lamont's offer to provide background information on the situation for which inspections were necessary, stating "not interested in more background." In the particular case at issue in the email exchange, the hearing officer ultimately made findings confirming that the unit suffered from serious habitability problems, including lack of heat, a broken bedroom window, mildew, a clogged sink, and cockroaches. (Piura v. EQR at Woodland Park, Case No. 2012/13 - 12.) The Respondent in that case was EQR who was found to have not responded in a timely manner to address substandard conditions.

This is a major interference with the Rent Stabilization program. The Program Administrator and staff are often the first point of contact tenants have with the City. As tenants can petition for a rent adjustment based on the landlord's failure to repair substandard conditions, these city employees are likely to encounter tenants who need inspection services. In order to protect tenants from living in unsafe or unhealthy conditions, staff should be encouraged to refer such tenants for inspections to make sure the problem is corrected in a timely manner. The City Manager's directive was inappropriate and interfered with rent program staff carrying out their work.

Regular Communications with EQR, Nothing Similar with Tenants or Tenant Advocates

The documents show that the City Manager was meeting regularly with representatives of Equity Residential, the company that owns more than half the rent controlled units in EPA. For example, in an email dated August 1, 2013 Chris Peter followed up on a meeting regarding concerns about the Rent Stabilization Administrator's handling of petitions. In the email, he thanks the City Manager for her "continued support." In an October 10, 2013 email, Chris Peter of EQR requested a meeting, stating, "John Hyjer and I would greatly welcome the opportunity for yet another sit down."

In addition to meetings, the records contain numerous emails between EQR and City Manager Gonzalez in which EQR takes aim at board regulations, hearing officer decisions, and the handling of petitions. In none of these emails, does City Manager Gonzalez challenge EQR's allegations or suggest that EQR should take its complaints to the Rent Board. Instead, the City Manager meets with EQR often, exchanges emails regularly, and forwards EQR's complaints to the Rent Stabilization Administrator expressing her "concern" about the allegations. For example, in a March 13, 2013 email from Gonzalez to Carol Lamont, Gonzalez relays EQR's concerns and writes, "I am very concerned about what seems to be our inability to meet our own ordinance." Gonzalez does not appear to entertain the possibility that EQR's complaints lack merit, nor does she investigate to determine this.

The documents show no communications regarding meetings with tenants or tenant advocates. In addition, Tenants Together has learned that at least two Rent Board members requested meetings with the City Manager and were told she was too busy, all while she was regularly making time to meet with EQR's representatives.

Review of the Program Not Independent & Reviewer Admits Lack of Expertise

The City Manager claims that in commissioning a review of the Rent Stabilization Program she was seeking "professional assistance in conducting a thorough and impartial assessment of the [rent stabilization] program." In a March 24, 2014, letter responding to the City Council regarding Council Member Abrica's inquiries about the review, Gonzalez claims that her decision to conduct the review was hers alone and not done at the request of landlords. Documents obtained through the PRA request reveal numerous emails from EQR complaining about the Rent Stabilization Program Administrator's handling of petitions in the months leading up to the contract for the review.

Emails between Nadine Levin, the consultant who conducted the review and authored the report, and Gonzalez reveal that the report is neither independent nor does it meet its stated purpose. Regarding the lack of independence of the reviewer, Levin was seeking employment as Interim Assistant City Manager, a position hired and supervised by the City Manager. In an email dated March 8, 2013, Levin confirmed her interest in the position. On March 18, 2013, Gonzalez entered into a contract with Levin to perform the review of the Rent Stabilization Program. During the months that followed, Levin obtained guidance and direction from Gonzalez by email on numerous occasions. Gonzalez instructed Levin regarding specific content to include in the report.

By August 2013, if not earlier, Levin recognized that she did not possess the necessary expertise to express an opinion on the ordinance or regulations: "The deeper I get into the Rent Stabilization Program assessment I realize how technical the issues are. I want to make sure that you are aware that the document I produce will not opinion [sic] on the ordinance or related regulations other than to comment on their complexity (as we discussed when we meet [sic] recently)."

A key issue in the review should have been whether there was merit to EQR's criticism of the Rent Stabilization Administrator's handling of petitions. Lamont's emails to the City Manager, as well as her letter to the City Council after release of Levin review, provide a detailed analysis of why EQR is incorrect in its assertions and is simply seeking to skirt its obligations as a landlord regulated under the law. To evaluate the landlord complaints, one must have (or consult with someone who has) expertise on the ordinance and applicable regulations. In response, Gonzalez wrote, "Yes, understood about the ordinance and reg's [sic]. You may want to say that they are very complex as compared to other's [sic] which makes it difficult to manage." At no point does Gonzalez offer to involve any neutral person who can help the reviewer sort out the details of the ordinance which are critical to any meaningful review.

A recurring problem with Gonzalez's approach to EQR in email correspondence, as with the approach taken in the Levin review, is the assumption that just because EQR complains of something, it must be true, rather than taking the time to analyze the facts. EQR's complaints are simply repeated in the Levin review without analysis.

No Effort to Include Tenant Voice in the Review

Nadine Levin informed Gonzalez in her email on July 10, 2013 that she only planned to interview two landlords, Chris Peter and John Hyjer with Equity Residential and Auria Malenasaleki with Housing Network, owner of 82 apartments at 1735 Woodland. The only tenant that Levin reports that she had interviewed is Shyree Randolph, who was interviewed (for 5 minutes, according to Randolph) as a member of the Rent Board. Levin states in her email "I don't have plans to meet with any other landlords or tenants. Do you feel for the sake or perceived validity to my review that I should meet with any additional tenants?" In response, Gonzales wrote, "I do not know who we would contact or how to locate i.e. someone who we already know was happy with outcome or not." The response suggests that rather than get a representative sampling, Gonzalez was interested in handpicking tenants to be interviewed based on their approval or disapproval of the program, but not sure how to find them. Regardless of selection process, she did not insist that tenants be interviewed. As a result, the lengthy review did not feature comments from tenants regarding their experience with a program designed to protect them from high rents and unfair evictions.

Tenants Together is deeply disappointed that an issue of such importance - rent control in East Palo Alto - was reviewed in such a superficial and misleading way. The fact that the City Manager wrote to the author that she was "pleased with the report," as well as the other circumstances described above, strongly suggests that City Manager Gonzalez's ongoing control of the rent stabilization program poses a serious threat to tenants in East Palo Alto.


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