By Niki Cervantes
Staff Writer

November 15, 2016 -- After a final shuffle of paperwork, the City of Santa Monica is bidding farewell to two of the last affordable apartments along its storied boardwalk.

Late last month, the City approved an occupancy permit to the owner of 10 apartments at 1401 Palisades Beach Road, a move that clears the way for rents to be raised to market value, officials said.

The units are located at a “relatively modest” location that is a vanishing reminder of “Gold Coast” resort living, circa 1909, City officials said.

The permit is the final step in a process allowed by the state’s 1985 Ellis Act, which gives landlords power to evict tenants from rent-controlled buildings if they sold the property, converted it into condominiums or let the building sit vacant for five years.

Included in the new permit is an apartment going for $550 a month – the average citywide rent about 15 years ago, officials said.

It is the least expensive unit among the 30 addresses on Palisades Beach Road listed in the City’s rent control database. An $863-a-month apartment in the same location is also included.

Outside of a $579-a-month apartment at nearby 1323 Palisades Beach Road, most of the nearby apartments on the list charge rents of between $2,000 and nearly $3,000 a month.

Market-rate rents have soared in Santa Monica as well as across the Los Angeles metropolitan area, driven by population growth, a housing shortage and a stronger local economy.

All but a few addresses on Palisades Beach Road are multi-million dollar homes or condominiums, said Neil Wessel, a Rent Control Board spokesperson.

Original bungalows on 1400 block of Palisades Beach Road (Courtesy of Santa Monica Library Image Archives)

Wessel said he was surprised to find such low rents along the boardwalk still existed.

“I haven’t seen anything like it,” he said.

The occupancy permit for 1401 Palisades Beach Road, which took effect Friday, names Brian Strange as the owner, according to an October 26 report to the City Council.

Strange bought the property in 2014, reportedly for $5.3 million.

The path to the property’s new permit was rocky, David Martin, the City’s Director of Planning and Community Development said in the report.

The location was first withdrawn from rent control and the rental market in 2006 by the previous owner, Martin said. The following year, the rent board learned that units were being re-rented without the legally required notification.

No fines are included in the rent control law, which was approved by voters in 1978 in reaction to skyrocketing rents.

However, Martin said the owner was notified of the board’s findings. Before a suit could be filed by the City, the board learned that the property -– which was by then vacant -- had been sold.

After buying the property, Strange complied with the legal requirements and was allowed to return the units to the rental market, a requirement under the Ellis Act.

For the City, the new permit takes another bite from Santa Monica's diminishing stock of affordable housing.

As of 2015, more than two-thirds of Santa Monica’s 27,542 rent-controlled units were occupied by tenants who had moved in after the Costa Hawkins Rental Act allowed landlords to raise the rents of most rent controlled apartments to market rates in 1999, according to the Rent Control Board’s final report.

That left fewer than 7,985 units with tenants who still paid the lower rates originally guaranteed by rent control, the report said.

Palisades Beach Road’s origins date to the late 1800s as part of a resort area for the era’s well-to-do. In the Roaring 20s, it became home to Hollywood royalty and the country’s most celebrated moguls and remains one of Santa Monica’s most coveted locations.

In 2006, an assessment of 1401 Palisades Beach Road’s historic value said the two buildings on the parcel were good examples of some of the “relatively modest” beachside homes of that time. Fashionable summer resorts were springing up then on the east coast in such spots as Newport, Cape Cod, eastern Long Island and coastal Maine.

The “Shingle” style of the time spread west but its remnants are scattered in Southern California and “relatively uncommon” in Santa Monica.