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Divided Santa Monica Rent Board Waits on Mandating Buyout Agreement Disclosure

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Jonathan Friedman
Associate Editor

March 16, 2015 -- Nobody was shouting, but there was clearly tension in the air Thursday night as Santa Monica Rent Control members debated about how best to handle the reported rise in the number of landlords offering buyout agreements to long-term tenants as a method to replace them with people who will pay higher market rates.

Two board members favored immediate passage of a measure requiring landlords to submit buyout agreement information to the board so they can be reviewed by the public

The other three board members preferred to wait so that Rent Control and City staff could sort out legal issues, including possible violations of privacy protection in the U.S. Constitution.

“This is a very thorny legal matter, and it needs more attention,” Board Chair Christopher Walton said.

Board member Todd Flora said waiting was not necessary, and accused his colleagues of not listening to the public speakers who wanted something passed.

He said buyout offers are being made as a way to intimidate, and tenants need all the information they can get to consider the offers, including documentation about other agreements that have been made in Santa Monica.

“I’m being given no real reason other than risk aversion and the thought that somebody might challenge us as reasons why we can’t move forward,” Flora said.

He added that if the board were to pass a measure, it could modify it at the next meeting.

“The difference is we will have taken a stand for our values, and started the clock on working for what people need,” Flora added.

Walton responded that he wanted a measure approved that would force a requirement for disclosure “in a way that is not repugnant to the Constitution.”

He added, “It has nothing to do with being risk averse or afraid of litigation. It has to do with having the right language before we vote” on the measure.

All buyout agreements must be filed as public records following the City Council’s recent passage of a so-called anti-harassment ordinance. If the rent board decides not to be the holder of the records, then this duty would go to the city clerk.

Board members talked about the rent board being the holder of the records during the two previous meetings. 

J. Stephen Lewis, the rent board’s general counsel, wrote in a staff report for Thursday’s meeting that he recommended the board hold off on passing any measure because it could raise privacy issues.

A similar measure recently approved in San Francisco is expected to be challenged in court, Lewis wrote.

Board member Nicole Phillis did not want to wait, and proposed a measure that she said was crafted after numerous hours of research.

Under Phillis’ proposal, landlords would have to submit certain details of the agreements for public review that would not give away where the unit is and who the people involved are. 

The information would include the amount paid in the buyout, the block where the unit is located, a range of the maximum allowable rent for the unit and the number of bedrooms it has.

Names of the landlord and the tenant would be submitted, but sealed.

“I think it strikes a good balance of privacy interests and also providing information to tenants, and it does it in a respectful way,” Phillis said.

She added that “time is of the essence” and that nothing would be gained by waiting a month to vote on her proposal, which Lewis said he did not oppose, but wanted to review further.

Phillis was only able to get Flora to vote for her proposal.

The board was able to agree on one matter. It unanimously approved a measure requiring landlords to use a special form to make buyout offers. The form would include a disclosure of rights the tenants have.

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