East Palo Alto council freezes rent hikes

By Banks AlbachBay Area News Group


In a bold move sure to prompt a legal challenge from the city's largest landlord, the East Palo Alto City Council on Tuesday passed an urgency ordinance freezing rent hikes for the next six months.
The unanimous decision, which takes effect immediately, was prompted by roughly 1,300 rent hikes brought on by Page Mill Properties on Dec. 1 and due on Feb. 1. Most of the increases ranged between $36 and $150. But some rents peaked much higher, including one tenant who received a 47 percent increase for a two-bedroom townhouse that was severely undervalued, the company's development director Jim Thompson said.

The council called a special meeting last Thursday to explore passing the ordinance, but the absence of Councilman David Woods made it impossible. Under state law, urgency ordinances need a four-fifths vote, so it was put on hold after Councilman Peter Evans abstained last week, citing numerous irregularities and fear of litigation.

Instead, the council passed a normal ordinance that would have taken effect a week after the rent increases are due.

Woods made it clear early on which way he was swaying.

"To not pass it as an emergency ordinance would be detrimental to the tenants," he said before voting. "I think it's very important we treat this as an emergency."

The city is contending that the increases are illegal under East Palo Alto's longstanding rent stabilization program, which caps rent increases at around 3.2 percent per year, a cost of living adjustment. But the city's rent control, which regulates about 2,500 units, 1,600 of which are owned by Page Mill, also runs on a system using certificates of maximum rent, which the city issues annually.

Over the last several years, the actual rent for hundreds of units has dropped, while the city continued to adjust the certificates at a higher rate. Page Mill based the rent increases off the higher of the two numbers, a discrepancy that has left hundreds of tenants in a tight squeeze between an outdated city ordinance and Page Mill.

"This more than a legal issue, this is a moral issue," Loma Eaves, a Page Mill tenant, told the council. "I ask you to support this moratorium tonight."

Page Mill's attorney, Chris Griffith, of the firm Ellman, Burke, Hoffman & Johnson, told the council it is in violation of numerous laws, and after the decision Mill's CEO David Taran said he plans to sue.

"We have no choice," Taran said. "When we bought those properties, the city told us the certificates were the law," Taran said. "If anyone's been tricked, it's us."

Griffith is claiming that the city may have acted illegally in how it passed the ordinance, that it violated state election law by passing the moratorium, which effects an ordinance passed by popular vote and can only be altered the same way, and that Councilman Ruben Abrica may have a conflict of interest because his name is on a 10-year-old Page Mill lease.

Abrica's possible conflict of interest was one reason why Evans abstained from last Thursday's vote.

Abrica defended his position, however, claiming he only recently moved into the unit six months ago and pays his brother 30 percent of the rent. City Attorney Michael Lawson told the council that Abrica's share of the 7 percent increase set to take effect on Feb. 1 is not enough money to mark a conflict of interest.

The big question - which could be answered in court - is how much was Page Mill allowed to raise rents. If the certificates reflect numerous years that had no increases, can Page Mill bank those amounts and combine them in a single increase?

Outgoing City Attorney Michael Lawson, along with outside counsel Rick Jarvis, are confident the answer is no; Griffith is banking on Page Mill's right to raise rents to the limit on the city-issued certificates.